Fair, clear and not misleading: what the FCA rule means, with examples

What does fair, clear and not misleading mean?

It is the FCA's basic standard for what a firm tells its customers, including the financial promotions it communicates or approves. For investments, the rule is COBS 4.2.1R: “A firm must ensure that a communication or a financial promotion is fair, clear and not misleading.”

The rule does not define the three words. The credit version sets out what they require:

COBS sets similar conditions for investments (COBS 4.5.2R; COBS 4.5A.3R for MiFID business). Two more points shape how they apply:

• The medium. The rule applies “in a way that is appropriate and proportionate taking into account the means of communication” and what it is meant to convey (COBS 4.2.2G, guidance).
• What is left out. True statements can still mislead. The FCA asks firms to “consider whether omission of any relevant fact will result in the information being insufficient, unclear, unfair or misleading” (COBS 4.5A.6G, guidance).

Where the rule sits in each FCA sourcebook

Each of these sourcebooks has its own version. All are rules; most require the firm to ensure the result, some only to take reasonable steps.

The phrase also governs consumer composite investment product summaries (DISC 3.1.2R(2), from 6 April 2026) and pensions dashboard services (PDCOB 4.2.1R). Principle 7, the Consumer Duty, CONC and ICOBS say “clear, fair”, COBS “fair, clear”; the FCA uses both orders for the same requirement (CMCOB 3.1.2G). In April 2026 the FCA consulted on removing provisions in CONC 3 “which may be overly prescriptive or outdated” (CP26/15); for now, CONC 3 applies as it stands. Our guide to consumer credit promotion rules covers the rest of it.

Principle 7 requires a firm to “pay due regard to the information needs of its clients, and communicate information to them in a way which is clear, fair and not misleading”. To the extent the Consumer Duty applies, Principle 7 does not (PRIN 3.2.10R), and the Duty carries the same words for retail customers. Principle 7 still covers, for example, services to professional clients (PRIN 3.2.11G).

Who has to meet the standard

COBS 4.2.1R(2) applies to a firm's communications to customers about designated investment business, MiFID or not, and to eligible counterparties about MiFID business or insurance distribution; to the financial promotions it communicates, other than excluded communications, non-retail communications and third party prospectuses; and to “a financial promotion approved by the firm”. Promotions to professional clients are covered, though they “may not need to include the same information, or be presented in the same way” as those to retail clients (COBS 4.2.2G).

An unauthorised business, such as an introducer or influencer, needs an authorised firm's approval or an exemption to communicate a financial promotion in the course of business (FSMA section 21). The approver must confirm compliance first, applying the rules for business other than MiFID business (COBS 4.10.2R(1) and (3); see the approval process).

For MiFID business, the requirement comes from article 24(3) of MiFID II: “All information, including marketing communications, addressed by the investment firm to clients or potential clients shall be fair, clear and not misleading.” COBS 4.2.1R's notes cite it. In the EU, article 44 of Delegated Regulation 2017/565 sets the detail (CySEC's marketing rules show it in use).

How COBS spells it out for investments

The FCA's guidance in COBS 4.2 says what an investment promotion should do:

COBS 4.2.5G adds that “guaranteed”, “protected”, “secure” or a similar term should be used only where it “is capable of being a fair, clear and not misleading description” and the firm gives all the information needed to make it so. The detailed conditions depend on whether the business is MiFID business:

In brief, past performance must not be the most prominent feature, must cover the preceding five years (or the whole period, if shorter) in complete 12-month periods, and needs a prominent warning “that the figures refer to the past and that past performance is not a reliable indicator of future results”. A forecast for a financial instrument needs “reasonable assumptions supported by objective data”, positive and negative scenarios and a warning. The FCA plans to consult in early 2027 on risk information for mainstream investments (FS26/3, 16 October 2026).

How the Consumer Duty raises the bar

For retail customers, the Consumer Duty keeps the standard and adds a test of understanding. PRIN 2A.5.3R requires communications that “are likely to be understood by retail customers” and “equip retail customers to make decisions that are effective, timely and properly informed”. It applies to promotions addressed to, or likely to be received by, a retail customer (PRIN 3.2.6R).

Firms must tailor communications to their customers' characteristics, including vulnerability (PRIN 2A.5.8R), and, where appropriate, test them before use and monitor them afterwards (PRIN 2A.5.10R). In March 2026 the FCA found that “Many firms relied only on compliance checks or sales data, without checking that customers understood the promotion” (FCA, 13 March 2026).

Sustainability claims: the anti-greenwashing rule

It applies to a firm “whether it is undertaking sustainability in-scope business or not”, when it communicates with UK clients about a product or service or communicates or approves a promotion for people in the UK (ESG 4.3.1R(1)). It has applied since 31 May 2024 (FG24/3, response to question 3).

The FCA's guidance, which “does not create new obligations” (FG24/3, paragraph 1.14), says sustainability references should be “[c]orrect and capable of being substantiated”, clear, complete and, where they compare, “fair and meaningful” (paragraph 2.17). Sustainability claims a firm makes about itself, rather than about a product or service, are covered by Principles 6 and 7 or the Consumer Duty, and by the CMA's and ASA's guidance (paragraph 2.15).

Claims that fail the standard, and how to fix them

Why each of these claims can fail, and the fix, with the provision behind it:

The FCA's own example: £100 sent at a firm rate of 1.26 US dollars to the pound, against a reference rate of 1.30.

The FCA lists “Highlighting the absence of a fixed fee as a ‘zero cost transaction’ despite charging a markup” as poor practice. It adds that such examples may not in themselves mean a firm is failing its duties, but show where it should consider improvements.

Where advertising law overlaps: the CAP Code and the DMCC Act

The CAP Code, enforced by the Advertising Standards Authority, says: “Marketing communications must not materially mislead or be likely to do so” (CAP 3.1). The CAP Code's financial rules in section 14 apply only to adverts the FCA does not regulate and to debt advice, but every financial advert stays subject to its rules on non-technical elements, including “the truthfulness of claims that do not relate to specific characteristics of financial products” (CAP Code, section 14, background). The FCA has told cryptoasset firms that the standards its financial promotion rules require are “significantly more detailed” than the ASA's (FCA, 7 September 2023).

The Digital Markets, Competition and Consumers Act 2024. Its unfair trading rules came into force on 6 April 2025 (S.I. 2025/272, regulation 2), replacing the Consumer Protection from Unfair Trading Regulations 2008. Unfair commercial practices are prohibited (section 225). Misleading information includes information which, “although true, is presented in a misleading way” (section 226(2)), and omitting information includes giving it “in such a way that the consumer is unlikely to see it” (section 227(4)). Misleading actions and omissions can be criminal offences (section 237), and the Competition and Markets Authority can impose penalties of up to £300,000 or, if higher, 10% of turnover (section 182(6)).

A checklist to test a promotion against the standard

These checks test the standard itself; the financial promotions checklist covers the rest of a review.

Connor reads a promotion (an image, video, PDF, web page or social post) and works out which rules apply from the firm's home regulator, the markets it targets and the products it promotes. It lists each problem with the rule it breaks and the fix, quoting the words each finding is about and linking to the regulator's text where one is published. A person at the firm makes the decision, and Connor keeps the record.