Section 21 approval and the FCA financial promotions gateway

Approval is how an unauthorised business promotes lawfully

Section 21 of the Financial Services and Markets Act 2000 (FSMA) bans financial promotions made in the course of business unless the communicator is authorised, or “the content of the communication is approved for the purposes of this section by an authorised person” (section 21(2)(b)). Unauthorised businesses such as introducers, start-ups, retailers and influencers use this route.

Exemptions that avoid approval altogether

Some promotions need no approval because the Financial Promotion Order 2005 exempts them. Among them:

S.I. 2024/301, in force from 27 March 2024, set the current thresholds for the high net worth statement at annual income of £100,000 or more, or net assets of £250,000 or more, and the turnover in the sophisticated investor director test at £1,000,000. Read the statement forms in the Order itself before relying on them.

These exemptions are narrower for high-risk products. Several do not apply to cryptoassets (see crypto promotion rules in the UK), and promotions of non-mass market investments to retail clients are subject to further FCA rules (COBS 4.12B).

The gateway: permission to approve

The Financial Services and Markets Act 2023 added a condition. Approval now counts only if it is given with the FCA's permission or under an exemption:

The content of a communication may be approved for the purposes of this section by an authorised person only if the giving of the approval— (a) is permitted under section 55NA (which enables approval to be given with FCA permission), or (b) falls within an exemption conferred by regulations under section 55NB.

Section 55NA(1) states the requirement directly: “An authorised person must not approve the content of a communication for the purposes of section 21 unless the person has permission to do so given by the FCA under this section.” The FCA's Handbook calls this approver permission. The FCA may grant it for all approvals or only for particular kinds, and may cancel it if the firm has neither given nor refused an approval for at least 12 months (section 55NA(4) and (8)).

The requirement took effect on 7 February 2024; section 20 of FSMA 2023 inserted it into FSMA 2000.

Approvals that need no gateway permission

1. The firm itselfContent it prepared, for an unauthorised person to communicate.
2. A company in its groupAn unauthorised person in the same group as the firm.
3. Its appointed representativeFor regulated activity the firm, as principal, has accepted responsibility for.

✕ Approving anyone else's content without approver permission is not a valid approval (section 21(2A)).

The exemptions are in regulation 3 of S.I. 2023/966. The FCA's guidance says the person who prepared a promotion “is likely to be the person who is principally responsible for its substantive content”, and that approving it does not, by itself, make the approver the preparer (PERG 8.9.1BG). In the FCA's view, a person who makes minor presentational changes to someone else's material, or repackages it, has not prepared it (PERG 8.9.1BG(4)). So a firm cannot use the first exemption by lightly editing someone else's draft.

What approvers must do

COBS 4.10 sets the duties, and they apply to every approval, with or without approver permission. The core duty comes first:

Before a firm approves a financial promotion for communication by an unauthorised person, it must confirm that the financial promotion complies with the financial promotion rules.

1. Confirm it complies, with the right expertiseThe people responsible must have “competence and expertise in the investment or financial service to which the financial promotion relates”; without it, the firm must get another firm to confirm compliance, or decline (COBS 4.10.9AR). Conflicts of interest with the person it approves for must be identified and prevented or managed (COBS 4.10.12R).
2. Put its name and the date on itAn approved promotion likely to reach retail clients shows the approving firm's name and the date of approval (COBS 4.10.7AG, referring to COBS 4.5.2R).
3. Monitor it while it runs“[F]or as long as the financial promotion is communicated, the firm must take reasonable steps to monitor the continuing compliance of that financial promotion” (COBS 4.10.2R(1A)). It must require “a written quarterly attestation that there has been no material change”, the first no less than three months after approval and then at least every three months (COBS 4.10.2R(1B)–(1C)).
4. Withdraw it if it stops complyingThe firm “must withdraw its approval and notify any person that it knows to be relying on its approval as soon as reasonably practicable” (COBS 4.10.2R(2)).

Two further points. A firm must not approve a promotion to be made in a personal visit, telephone call or other interactive dialogue (COBS 4.10.4R). And if it cannot get an attestation, it should consider withdrawing approval (COBS 4.10.3AG).

Reporting to the FCA

Firms with approver permission report every six months, within 30 business days of the end of each period, and must submit a return “even if it has not approved any financial promotions” (SUP 16.31.9R). The return covers the number of promotions approved by type of investment, complaints and revenue (SUP 16.31.10R).

They must also notify the FCA within seven days of (SUP 16.31.5R):

• approving a promotion for a non-mass market investment;
• approving a qualifying cryptoasset promotion that is a direct offer financial promotion, or any qualifying cryptoasset promotion in the three months that begin with the firm's first such approval after its permission is granted or varied to cover them;
• approving amendments to, or withdrawing approval of, any promotion because of a notifiable concern.

Approvals given under an exemption are outside these reporting rules (SUP 16.31.3G).

What the FCA found in 2026

On 27 May 2026, the FCA published the results of its review of 10 authorised firms that approve promotions for buy-now-pay-later, crowdfunding and corporate finance businesses (FCA, 27 May 2026):

“The FCA found that the strongest firms were applying the Consumer Duty from the start of their processes. They were able to make sure that every promotion approved was accurate, clear and reached the right audience. However, the FCA also found that some firms approved adverts with unsubstantiated claims or allowed retail investors to see promotions intended for professional clients. In some cases, firms relied on third-party templates instead of doing proper checks themselves.”

According to the FCA, one firm had to carry out a remediation exercise, and some websites were blocked to retail customers.

A checklist for approvers

Connor gives approvers a first read of each promotion against the rules that apply, with the rule cited for every finding. It keeps the record of who decided what, and can check approved partners' social accounts and websites on a schedule.