Mind the Hype: The Law on Financial Promotions in the UK

Why This Matters

Tempted to post about your new investment scheme on LinkedIn? Thinking of slipping a few promising numbers into your next client newsletter? Careful now. In the UK, encouraging people to invest in anything – be it a bond, a business, or a baffling crypto token – is likely to be a “financial promotion”, and that means rules. Serious ones.

Under section 21 of the Financial Services and Markets Act 2000 (“FSMA”), you’re not allowed to promote investments to the public unless you’re authorised by the FCA, working with someone who is, or relying on a legal exemption. No authorisation, no promotion. No excuses.

These rules aren’t there to spoil your big idea. They’re there to stop people being sweet-talked into risky schemes with shiny returns and very little reality. That includes the well-meaning but overly enthusiastic founder, the helpful go-between who isn’t quite sure what they’re promoting, and anyone whose investment pitch involves the phrase “once-in-a-lifetime”.

Get it wrong, and you could end up with more than a telling-off. We’re talking criminal penalties, invalid contracts, and a reputation that won’t recover with a hasty disclaimer and a cheerful “oops”.

So, what exactly counts as a financial promotion? When does section 21 apply? And how do you stay safely on the right side of the line?

What Is a Financial Promotion?

A financial promotion is any communication that invites or encourages someone to invest. The format doesn’t matter. It could be an email, a brochure, a phone call, a podcast, a social media post, or even a flyer stuck to a lamppost – if the content is trying to get someone to part with their money for investment purposes, you’re probably in choppy waters.

Example:

You message your contacts: “We’re offering 12% annual returns on our new bond – let me know if you want in.” That’s a financial promotion. No need for a website or branding – just a sentence with financial intent.

Not all communications are caught. Factual statements – like “ABC Ltd is issuing a three-year bond at £1 per unit” – might fall outside the rules if you stop short of persuasion. But the line between “here’s a fact” and “here’s a nudge” is thin. If there’s any chance it might influence someone’s decision to invest, it’s safer to assume it qualifies.

The General Rule: Section 21 FSMA

The starting point under section 21is straightforward: you can’t make a financial promotion in the course of business unless one of three things applies:

• You are authorised by the Financial Conduct Authority (or the Prudential Regulation Authority).
• The promotion has been approved by someone who is authorised.
• The communication qualifies for a legal exemption.

In other words, if you’re not regulated and your content hasn’t been signed off, your homemade marketing could be an unlawful financial promotion – regardless of how casual or private it might seem.

Example:

You’re raising money for your business and publish a call to invest on your website: “We’re looking for £1 million – get in now for early rewards!” Unless you’re authorised or that statement has been reviewed and approved by someone who is, that’s a breach of section 21.

Who Can Approve Promotions?

If you’re not authorised, your other option is to have your promotion approved by someone who is. But since 2023, not just any authorised firm will do.

The FCA now requires firms to apply for specific permission to act as approvers under what’s known as the “financial promotion gateway”. It’s no longer enough to have a regulatory licence in general – you need to be authorised to approve other people’s marketing, and you need to take that job seriously.

This is no longer a quick once-over and a nod. Approving a financial promotion comes with responsibilities. The content must be checked to ensure it’s fair, clear and not misleading. In other words, if the copy leans more towards fantasy than fact, the approver is on the hook too.

Example:
You approach a friendly IFA to approve your real estate scheme brochure. Unless they’ve applied for and received permission from the FCA to act as a permitted approver, they can’t approve it – even if they think it’s perfectly sound.

What About Exemptions?

There are over 70 exemptions in the Financial Promotion Order 2005 – and a fair few of them are actually useful. If your promotion falls within one of these, you don’t need FCA approval (or authorisation) at all.

You can promote investments to:

• Certified high net worth individuals (earning £100,000+ or with at least £250,000 in net assets, excluding their home and pension).
• Self-certified sophisticated investors (like directors of £1 million+ turnover companies or those who’ve invested in unlisted companies before).
• Investment professionals (including regulated firms, lawyers and accountants).
• Existing shareholders or creditors.
• High net worth companies (generally those with £5 million+ in assets).

Example:
You run a theatre production company and want to raise £250,000. You send investment materials to a group of individuals who’ve signed a valid high net worth investor statement. That’s allowed, provided the communication contains the correct disclaimers and doesn’t stray into the inboxes of people who don’t qualify.

The thresholds for some of these categories were lowered in March 2024, in a modest attempt to help small businesses raise capital. But exemptions only work if you stay within the lines. One misdirected email and the exemption may not protect you.

Communications Are Media-Neutral (So Be Careful Online)

The rules don’t care how you dress it up – it’s the message that matters.

Whether you’re posting on LinkedIn, speaking on a podcast, launching a website or doing an Instagram Live, if you’re inviting or encouraging someone to invest, it’s a financial promotion. And if it’s a financial promotion, the full weight of section 21 applies – regardless of whether your audience is wearing suits or scrolling in loungewear.

Example:
You upload a video talking about your investment opportunity and include a link to sign up. That’s a financial promotion. If the content hasn’t been approved or doesn’t fall within an exemption, you’re in breach – even if you only meant it for a UK audience. Content crosses borders. So does the FCA’s interest.

Real-Time vs Non-Real-Time

The law distinguishes between real-time and non-real-time promotions.

Real-time means any interaction that happens live – calls, in-person chats, meetings. Non-real-time covers emails, websites, printed material – anything where the content is reviewed in your own time.

Unsolicited real-time promotions (like cold calls) are particularly fraught. Unless someone has specifically asked for the information, you’re on shaky ground – and very likely in breach.

Example:
You call a prospective investor without prior agreement and start outlining your new bond issue. That’s an unsolicited real-time promotion. Unless you fit within one of a very narrow set of exemptions, it’s not allowed.

What If You Break the Rules?

Breaching section 21 is a criminal offence. The consequences are not to be taken lightly. Penalties include up to two years in prison, an unlimited fine, and the possibility that your investor contracts are unenforceable. If that happens, investors can demand their money back, regardless of what your documents say. The FCA can also issue injunctions or publish public warnings.

Example:
In 2020, the FCA acted against individuals promoting share offerings via glossy brochures. The materials were unauthorised and overly optimistic. Investors were misled. The courts ordered restitution and banned those involved from further promotions.

And remember you don’t have to send the communication yourself to be liable. If you drafted the message, paid for the ad, or encouraged someone else to share it, you may still be caught.

 So, What Should You Do?

Here’s a sensible approach.

Start by asking whether your communication encourages or invites someone to invest. If it does, and you’re not authorised, ask whether it fits into an exemption. If it doesn’t, then you’ll need a firm that’s permitted to approve promotions – and they’ll need to review your content properly.

If you are relying on an exemption, make sure the correct statements and warnings are included, and that only eligible people receive the promotion.

Finally, keep records. Who received it, how they qualified, what wording was used, and who (if anyone) signed it off. It’s the paper trail that keeps you out of trouble if questions are asked later.

The Last Word

Financial promotions aren’t just about getting the word out – they’re about legal risk, investor protection, and making sure people aren’t drawn into something they’ll regret. The law isn’t there to stop you raising capital. It’s there to stop you raising it carelessly, recklessly, or with the sort of pitch that sounds better over cocktails than in court.

Whether you’re crowdfunding a film, launching a bond, or nudging investors toward your next venture, the rules apply. And with the FCA tightening its grip and consequences that now come with teeth, the margin for error is shrinking fast.

So, get advice early, know your exemptions – and if you’re still not sure? Don’t hit send.