The Basic Restriction

Section 21 of the Financial Services and Markets Act 2000 says that a person must not, in the course of business, communicate an invitation or inducement to engage in investment activity unless they are an authorised person, or the content of the communication is approved by an authorised person, or an exemption applies. Breaching the restriction is a criminal offence, and agreements resulting from unlawful promotions may be unenforceable.

For authorised firms, the promotions they communicate must also meet the FCA’s conduct rules for the relevant sector. These sit in different parts of the Handbook depending on the business, for example:

The common thread across all of them is that communications must be fair, clear and not misleading. Specific rules then cover risk warnings, past performance, comparisons, representative examples for credit, and much more. Firms should check the detailed rules for their own permissions rather than relying on a general summary.

The Consumer Duty Raises the Bar

The Consumer Duty adds a further layer for retail business. Its consumer understanding outcome requires firms to communicate in a way that supports customers’ understanding and equips them to make effective, timely and properly informed decisions. That goes beyond technical compliance: a promotion can contain every required disclosure and still fail if, in practice, customers misunderstand it. The FCA expects firms to test communications where appropriate and to monitor outcomes. Our Consumer Duty guide for Senior Managers covers the wider framework.

Who Owns Financial Promotions?

Responsibility for financial promotions isn’t a separate Senior Manager Function, but in most firms it sits clearly with the compliance function. The compliance officer typically:

• Owns the policy. Setting out what counts as a promotion, who can create one, the approval process and the records kept.
• Runs or oversees approval. Reviewing promotions before they are communicated, or overseeing a team that does.
• Monitors live promotions. Checking that promotions remain compliant over time and are withdrawn when they are out of date.
• Monitors channels. Including social media, affiliates, introducers and any influencer arrangements.
• Reports to the board. Including volumes, rejections, issues found and any FCA contact.

At smaller firms the compliance officer often reviews promotions personally. At larger firms, a dedicated financial promotions team does the day-to-day review, with the compliance officer providing oversight. Either way, financial promotions should feature in the firm’s compliance monitoring plan. Our guide to the compliance monitoring plan explains how.

A Good Approval Process

Social Media and Finfluencers

Social media has become one of the FCA’s main areas of focus. The regulator’s guidance on financial promotions on social media makes clear that the same rules apply whatever the channel, and that character limits, image formats and the speed of social media are no excuse for omitting required information or balance. The FCA has also published guidance on “finfluencers”, making clear that firms are responsible for promotions communicated on their behalf by influencers, and that influencers who promote financial products without the necessary approval may be committing a criminal offence. Compliance officers should make sure any affiliate or influencer arrangements are approved, monitored and documented, and that marketing teams understand the rules.

Approving Promotions for Unauthorised Firms: The Section 21 Gateway

Authorised firms can approve financial promotions for unauthorised businesses to communicate. Since February 2024, firms wishing to do so for others generally need permission through the FCA’s section 21 “gateway”, with limited exceptions, for example for approving promotions within the same group. The gateway was introduced because the FCA had found poor standards among some firms approving promotions for third parties. Firms that approve promotions through the gateway take on significant responsibilities, including ongoing monitoring and regular reporting to the FCA. The FCA’s financial promotions pages set out the requirements. Compliance officers at firms considering this work should treat it as a distinct activity with its own controls and resources.

Cryptoasset Promotions

Since October 2023, promotions of qualifying cryptoassets to UK consumers have been brought within the financial promotions regime. They can be communicated by an authorised person, approved by an authorised person with the relevant permission, or communicated by a cryptoasset business registered with the FCA under the Money Laundering Regulations, relying on an exemption. Promotions must meet rules including clear risk warnings, a ban on incentives to invest, a cooling-off period for first-time investors, and client categorisation and appropriateness assessments. The FCA has issued large numbers of alerts against non-compliant crypto promotions. Crypto firms preparing for the new authorisation regime will need compliance officers with genuine experience of these rules. Our page on SMF recruitment for cryptoasset firms covers the roles involved.

What the FCA’s Intervention Data Shows

The FCA publishes regular data on its financial promotions work, including the number of promotions amended or withdrawn following its intervention and the alerts it issues about unauthorised firms. The data has shown consistently high levels of intervention, with recurring themes such as missing or inadequate risk warnings, unbalanced presentation of benefits and risks, misleading claims, and poor practice on social media. The figures are a useful benchmark for compliance officers: if the regulator is finding the same failings repeatedly across the market, it is worth testing for them in your own firm.

Common Failings

• promotions going live without approval, especially on social media or through affiliates;
• approval based on a draft, with the final version changed afterwards;
• benefits given more prominence than risks, or risk warnings that are hard to see;
• out-of-date rates, performance figures or product features left on websites;
• no monitoring of introducers, affiliates or influencers;
• approvers without the knowledge of the relevant sector rules; and
• records that can’t show who approved what, when and on what basis.

What It Means for Hiring

Financial promotions experience is one of the things firms should test when recruiting a compliance officer, particularly in retail sectors such as consumer credit, investments, payments and crypto, where promotions volumes and FCA scrutiny are highest. Strong candidates can describe the approval process they ran, promotions they refused or amended and why, how they handled social media and third parties, and how they evidenced Consumer Duty outcomes. Our guide to the experience that matters by firm type covers this in more detail.

Our page on compliance officer recruitment (SMF16) explains how we run these searches. For smaller firms, a part-time compliance officer can provide experienced oversight of promotions without a full-time salary, and where one person holds both compliance and MLRO roles, our page on combined compliance officer and MLRO recruitment applies.

Frequently Asked Questions

Does the compliance officer have to approve every promotion personally?

No. The firm must have an effective approval process with competent approvers. At smaller firms that is often the compliance officer; at larger firms a dedicated team approves promotions under the compliance officer’s oversight.

Do the rules apply to social media posts?

Yes. The same rules apply whatever the channel, and the FCA has published specific guidance on social media and on promotions by influencers.

Can we approve promotions for an unauthorised partner?

Generally only if your firm has permission through the FCA’s section 21 gateway, unless an exception such as an intra-group approval applies.

Are cryptoasset adverts covered?

Yes. Promotions of qualifying cryptoassets to UK consumers have been within the financial promotions regime since October 2023, with specific rules on risk warnings, incentives and cooling-off periods.

Should financial promotions be in the compliance monitoring plan?

Yes. Testing live promotions, approval records and third-party channels is a standard part of a risk-based monitoring plan for most retail firms.