Harper James advises UK businesses on financial promotions compliance under the laws of England and Wales. The central rule is section 21 of the Financial Services and Markets Act 2000 (FSMA): a person must not communicate an invitation or inducement to engage in investment activity unless the communicator is authorised, the promotion has been approved by an authorised person, or an exemption applies.
A financial promotion can include an advertisement, website page, email, social media post, investor presentation, pitch deck, telephone script or direct message. The test focuses on the content and commercial effect of the communication, not its format or the label applied to it. Promotions concerning shares, loans, collective investments, insurance, derivatives and certain cryptoassets require particular care. Separate rules apply to regulated mortgage and consumer credit activity, while the UK financial promotions regime for qualifying cryptoassets also covers promotions made by overseas businesses to UK consumers.
Before publication, the business should identify the product, intended audience and communication channel, then establish whether the activity is regulated. It should identify the legal basis for the communication: FCA authorisation, approval by an authorised person, or a specific exemption under the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005. The review should test whether statements are fair, clear and not misleading, with balanced treatment of benefits, risks, costs, limitations and eligibility conditions. A prominent risk warning does not correct an otherwise misleading impression.
Where an authorised firm approves a promotion, it must carry out its own substantive assessment and retain evidence of that process. The business issuing the promotion should keep the final version, approval record, supporting data, risk analysis, audience definition and details of distribution. Controls should also cover amendments, reposting, affiliate content, employee communications and third-party marketing agencies. Promotions require review when the product, assumptions, regulatory position or underlying performance data changes. Breaches can lead to criminal liability, enforcement action, withdrawal of approval and restrictions on communicating with UK consumers.