In the United Kingdom, a financial promotion is an invitation or inducement to engage in investment activity.

In the United Kingdom, a financial promotion is an invitation or inducement to engage in investment activity. The concept is broad. It can cover statements in websites, adverts, emails, social media posts, presentations, and other communications where the content invites or encourages a person to take a step connected with an investment.

A person does not need to be authorised to create a regulated financial promotion. The restriction applies more broadly. A person must not, in the course of business, communicate an invitation or inducement to engage in investment activity unless the person is an authorised person or the content is approved by an authorised person, or an exemption applies. That is why communications by unauthorised persons can still be regulated.

The practical mechanism is simple. First, ask whether the communication is made in the course of business. Second, ask whether its content is an invitation or inducement to engage in investment activity. If the answer to both questions is yes, the communication is within the financial promotion regime unless an exemption applies.

For firms that communicate or approve a financial promotion, the FCA Handbook adds content standards. A firm must ensure that a financial promotion is fair, clear and not misleading. The communication must present information in a way that is balanced and understandable for the audience, including where the promotion refers to benefits, risks, conditions, or limitations.

The Handbook also applies this standard across different forms of communication. A promotion must not hide important information or present it in a way that weakens its effect. Where a communication compares services, refers to tax treatment, or includes past or future performance information, the relevant COBS rules set additional conditions for how that material may be presented.

For quantitative traders and compliance teams, the compliance question is not limited to whether a message is labelled as marketing. The legal question is whether the message functions as an invitation or inducement to engage in investment activity. If it does, the financial promotion restriction and the COBS content rules can become relevant even when the original speaker is not authorised.

Covered in depth in the From research to publishing pillar hub.