Financial promotions compliance is an area where payment firms frequently underestimate the regulatory requirements. The FCA has made clear that it views misleading or non-compliant promotions as a significant source of consumer harm, and enforcement action in this area has increased substantially. This guide covers the key rules and practical compliance steps for payment institutions and EMIs.
The Financial Promotion Restriction
Section 21 of the Financial Services and Markets Act 2000 (FSMA) creates the 'financial promotion restriction': a prohibition on communicating an invitation or inducement to engage in investment activity, unless the communication is made or approved by an authorised person or falls within an exemption in the Financial Promotion Order 2005. Since 8 October 2023 it also covers cryptoasset activity.
The key point for payment firms: providing payment services and issuing e-money are generally not 'controlled activities' under the Financial Promotion Order, so ordinary marketing of a payment account, card or transfer service is not usually a financial promotion in the section 21 sense. That does not mean the marketing is unregulated. The FCA applies its Principles for Businesses to authorised payment institutions, small payment institutions and EMIs under PRIN 3.1.1A, and the Consumer Duty applies to their dealings with retail customers.
| Promotion | Main rules | Who can communicate it |
|---|---|---|
| Payment services or e-money | Principle 7, Consumer Duty, PSRs and EMRs information rules | The firm itself |
| Products that are controlled investments, such as savings or investment features offered through a partner | Section 21 FSMA and COBS 4 | An authorised firm, or approved by an authorised s21 approver |
| Cryptoassets to UK consumers | Section 21 FSMA and COBS 4.12A | An authorised firm with the right permission, an approved promotion, or an MLR-registered cryptoasset business (Article 73ZA) |
Where section 21 does apply, breach is a criminal offence under section 25 of FSMA carrying up to two years' imprisonment, a fine or both, and agreements made as a result may be unenforceable.
The Clear, Fair and Not Misleading Standard
The FCA's overarching standard is that communications must be 'clear, fair and not misleading'. For payment institutions and EMIs it comes from Principle 7 of the Principles for Businesses and the Consumer Duty's consumer understanding outcome, read with the FCA's Payment Services and Electronic Money Approach Document. It applies to all customer communications, including: website content; social media posts; email marketing; paid advertising (search, display, print); app store descriptions; agent and distributor marketing materials; and promotional materials at events or in physical locations.
Clear means that the information is presented in a way that is likely to be understood by the average member of the target audience. Technical jargon, complex fee structures or important limitations should not be obscured by marketing language. Fair means that the promotion does not emphasise potential benefits without also giving a fair and prominent indication of risks or limitations. Not misleading means that the promotion does not create a false or deceptive impression, whether by what it says, what it omits, or how it presents information.
Social Media and Digital Promotions
The FCA's finalised guidance on financial promotions on social media is FG24/1, published in March 2024, which replaced FG15/4. Key points include: character limits on platforms like X (formerly Twitter) do not excuse non-compliance, if the essential information cannot be included within the character limit, the firm should use a different format or include a prominent link to a page containing the required disclosures; 'stories' and other ephemeral content formats are subject to the same rules as permanent content; influencer marketing arrangements must comply with both FCA rules and ASA/CAP codes, the firm is responsible for ensuring that any promotion communicated by a third party on its behalf is compliant; and user-generated content, retweets and shares can constitute financial promotions if they amount to communications by or on behalf of the firm.
Cryptoasset Financial Promotions
Since 8 October 2023 cryptoasset promotions to UK consumers have been inside section 21 under the Financial Services and Markets Act 2000 (Financial Promotion) (Amendment) Order 2023. A cryptoasset promotion must be communicated by an authorised firm, approved by an authorised firm with permission to approve financial promotions (required since 7 February 2024), or communicated by a cryptoasset business registered with the FCA under the Money Laundering Regulations, relying on the Article 73ZA exemption. The rules in COBS 4.12A require prescribed risk warnings, a 24-hour cooling-off period for first-time investors, client categorisation and appropriateness assessments. From 25 October 2027, when the new UK cryptoasset regime starts, firms carrying on the new regulated cryptoasset activities will be authorised and communicate their own promotions. See our UK cryptoasset registration page.
Practical Compliance Steps
Payment firms should implement a structured financial promotions compliance process that includes: a centralised review and approval process for all marketing materials before publication; clear accountability, a named director or person responsible for management who owns financial promotions compliance; documented review criteria covering the clear/fair/not misleading standard, required disclosures, risk warnings and regulatory status statements; regular reviews of existing published materials (website, social media, app stores) to identify and update non-compliant content; training for marketing teams, agents and distributors on the financial promotions rules; and a process for monitoring third-party promotions (including agent marketing and affiliate/referral arrangements).
The FCA's approach to financial promotions enforcement has shifted from primarily reactive (responding to complaints) to proactive (systematic website reviews, social media monitoring and mystery shopping exercises). Firms should assume that their marketing materials will be reviewed by the FCA at some point and ensure that all published content meets the required standard.
Regulatory Counsel advises payment institutions and EMIs on financial promotions compliance, marketing review processes and FCA enforcement matters. Contact us for a written proposal. See our compliance monitoring page for more.
Frequently asked questions
Under section 21 FSMA it is an invitation or inducement to engage in investment activity or, since 8 October 2023, cryptoasset activity. Marketing of payment services and e-money is generally outside that definition, but it remains subject to Principle 7 and the Consumer Duty.
They must be clear, fair and not misleading. Benefits must not be emphasised without fair and prominent indication of risks or limitations.
No. If essential information cannot fit within the character limit, the firm should use a different format or include a prominent link to required disclosures.
Where section 21 applies, breach is an offence under section 25 FSMA carrying up to two years' imprisonment, a fine or both. For payment and e-money marketing, the FCA can require withdrawal or amendment and take disciplinary action for breach of Principle 7 or the Consumer Duty.
Not usually. Issuing e-money and providing payment services are generally not controlled activities under the Financial Promotion Order. The EMI must still meet Principle 7 and the Consumer Duty, and must not suggest e-money is protected by the FSCS.
Only if it is an FSMA-authorised firm with the FCA permission to approve financial promotions, which has been required since 7 February 2024. A payment institution authorised only under the PSRs cannot approve them.
Definitive guides on this topic
The permanent reference pages this article relates to.