Rules and ethics
How UK financial promotion rules apply to women founder funding adverts
Women business funding adverts must follow FCA financial promotion rules: FSMA section 21, COBS 4, approval by authorised persons, and clear risk warnings.
What to take away
- An advert that invites women to invest in a funding round is a financial promotion, so FSMA 2000 section 21 and FCA COBS 4 apply to it.
- An unauthorised promoter needs either a narrow exemption or approval from an FCA-authorised person before publishing.
- COBS 4 requires wording that is fair, clear and not misleading, with a risk warning where due and no guaranteed returns.
- Check the approver's permissions on the FCA Register and keep a written record of the approval.
Does a funding advert count as a financial promotion?
Yes, when it invites or induces investment. Section 21 of the Financial Services and Markets Act 2000 prohibits invitations to engage in investment activity in the course of business unless the communicator is authorised or exempt.
A grant advert is not caught, because it offers money rather than asking for it. The test is the wording of the communication, not the size of the organisation or the channel used.
| Communication | Financial promotion? |
|---|---|
| "Invest in our next round" | Yes |
| "Register your interest to invest" | Yes, it is an inducement |
| "Apply for our women founder grant" | No |
| A general explainer on SEIS reliefs | Usually no |
The statutory notes confirm that inducements count, not only formal offers. The financial promotion rules set out the exemptions and the approval route in practical terms.
Does section 21 apply?
Is it in the course of business?
restriction may apply
outside scope
Who can approve a promotion, and how
The FCA authorisation pages explain who needs permission and how to apply. Work through this order.
- Decide whether the advert invites or induces investment.
- Check whether the promoter is authorised or exempt. The financial promotion order exemptions are narrow: certified high net worth individuals, self-certified sophisticated investors and professional advisers.
- If neither applies, appoint an FCA-authorised approver that holds the relevant permission.
- Obtain written confirmation and retain the approval record.
A platform's own authorisation never covers your advert. Each promoter answers for its own communication, even on social media.
What COBS 4 requires the advert to contain
The FCA Handbook holds the Conduct of Business Sourcebook. COBS 4 binds authorised firms and the promotions they approve for others.
- The overall impression is fair, clear and not misleading (COBS 4.2.1).
- A risk warning appears where COBS 4.5 requires one.
- Projections and past performance are balanced, not presented as likely outcomes (COBS 4.6).
- Direct offer promotions carry the key information required by COBS 4.7.
- A reader can tell the content is an advert, not editorial.
Our compliance guide covers the wider duties that sit alongside COBS 4 for a funding service.
Example: the same round, written two ways
A compliant advert names the scheme, says the tax reliefs are conditional, and states the main risks plainly.
Aurora Ventures is raising a seed round to back women-led startups in Greater Manchester. The round uses the Seed Enterprise Investment Scheme (SEIS). Tax reliefs depend on individual circumstances and may change. Early-stage investing carries the risk of capital loss and illiquidity. This is not a savings product. Past performance is not a guide to future returns. Read the offer document before investing.
The non-compliant version promised "20% returns in 12 months, every time", said women-led startups "always succeed", and called profits "tax-free for all investors". Each phrase fails COBS 4.2.1, and the tax claim contradicts SEIS eligibility.
Non-compliant wording vs rule
Non-compliant wording
- 20% returns, every time
- Misleading returns claim
- Always succeed
- Unrealistic claim
- Tax-free profits for all
- Wrong tax relief claim
- Limited spots, act now
- Pressure tactic
Breach
- 20% returns, every time
- Always succeed
- Tax-free profits for all
- Limited spots, act now
Checking an approver and the consequences of getting it wrong
Communicating an unapproved invitation to invest is a criminal offence, and agreements made in breach may be unenforceable. The FCA can also act against an approver who signed off carelessly.
Use the register check guide to confirm a firm's permissions and its Companies House filings before you rely on it.
Common questions
Does a grant advert need FCA approval?
No. A grant offers money rather than inviting investment, so section 21 does not apply. The advert should still avoid misleading claims about who will win.
Who approves a promotion when the promoter is not authorised?
An FCA-authorised person with the relevant permission, or the promoter relies on a narrow exemption. The approval must be genuine and recorded.
Did the Financial Services and Markets Act 2023 change section 21?
No. Section 21 of FSMA 2000 still stands. The 2023 Act changed rule-making and added the designated activities regime, which matters mainly to overseas promoters.
What happens if an advert breaches the rules?
Unapproved invitations to invest are a criminal offence, related agreements may be unenforceable, and the FCA can act against the promoter and the approver.
