Finfluencer financial promotions: which activities are caught
In short: Finfluencer financial promotions are caught by the restriction in section 21 FSMA where they concern a controlled activity or a controlled investment, which covers consumer credit, qualifying cryptoassets and investments. The authorised firm behind the affiliate is responsible for the post, because section 21(13) treats causing a communication to be made as communicating it. Approving a promotion for an unauthorised person needs FCA permission under section 55NA.
The FCA reported on 9 July 2026 that a coordinated operation with nine other regulators against illegal finfluencer promotions produced three arrests and 650 requests to social media platforms to remove content. Arrests and takedowns are aimed at the promoters and the platform. The regulated firm that paid the influencer faces a different problem. Section 21(13) of the Financial Services and Markets Act 2000 treats causing a communication to be made as communicating it, so an authorised firm answers for what its affiliates post whether or not it wrote a word of it. A firm running an affiliate programme has to answer three questions: is the product promoted within the restriction at all, who may lawfully approve the promotion, and what has to be done once it is approved?
Key findings (FCA Annual Report and Accounts 2025/26)
- A coordinated week of action on finfluencers, run with nine international regulators in June 2025, produced 3 arrests, 6 criminal proceedings, 11 targeted warning or cease-and-desist letters, 50 warning list alerts and 650 social media takedown requests. Source: FCA Annual Report and Accounts 2025/26 (HC 319), p 37.
- The FCA issued 2,329 warnings about unauthorised or potentially scam firms in 2025, against 2,240 in 2024. Source: FCA press release, 9 July 2026.
- The regulator secured 17 criminal convictions in the year, including for fraud, insider dealing, money laundering and DPA offences. Source: FCA press release, 9 July 2026.
- Two individuals received a combined 11 years’ imprisonment for insider dealing and money laundering, and 12 individuals were fined a total of £1.77m for market abuse. Source: FCA press release, 9 July 2026.
| What the firm promotes | Inside section 21? | Provision |
|---|---|---|
| Payment services | No. Not a controlled activity. | FPO 2005, Sch 1 Part I |
| Electronic money | No. Not a controlled investment. | FPO 2005, Sch 1 Part II; PERG 8.7.2G |
| Consumer credit and credit broking | Yes. | FPO 2005, Sch 1 paras 4B, 26D |
| Qualifying cryptoassets | Yes. | FPO 2005, Sch 1 paras 3, 4, 26F |
| Securities and contractually based investments | Yes. | FPO 2005, Sch 1 paras 3, 12 to 27 |
| Deposits | Yes, but a sum immediately exchanged for e-money is not a deposit. | FPO 2005, Sch 1 para 1; RAO art 9A |
Which activities section 21 catches
Section 21 of the Financial Services and Markets Act 2000 (FSMA) prohibits a person, in the course of business, from communicating an invitation or inducement to engage in investment activity or claims management activity. The restriction lifts only where the communicator is authorised, an authorised person has approved the content, or an exemption in the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 applies.
Schedule 1 to the Financial Promotion Order is a closed list. Section 21(8) defines engaging in investment activity as entering an agreement whose making or performance is a controlled activity, or exercising rights conferred by a controlled investment, and both terms mean only what the Treasury has specified in that Schedule. There is no residual financial-services limb. Payment services do not appear, and the FCA states the consequence at PERG 8.7.2G: “electronic money is not a controlled investment. This means that the restriction in section 21 does not apply to the communication of an invitation or inducement that concerns electronic money.” Article 9A of the Regulated Activities Order provides that a sum immediately exchanged for electronic money is not a deposit.
Two consequences follow for payments firms. Payment services and electronic money appear nowhere in Schedule 1, and the FCA confirms at PERG 8.7.2G that electronic money is not a controlled investment, so a firm promoting a payment account or an e-money wallet and nothing else is outside the restriction. A firm that does promote a relevant credit agreement, a qualifying cryptoasset or a controlled investment is inside it, and is worse placed than an authorised firm when it gets there: a payment institution authorised under the Payment Services Regulations 2017, or an e-money institution authorised under the Electronic Money Regulations 2011, is not an authorised person for FSMA purposes; it cannot approve its own promotion, cannot hold approver permission, and must instruct an external approver.
Who answers for a finfluencer’s post
Section 21(13) FSMA treats causing a communication to be made as communicating it. The High Court applied that in Financial Conduct Authority v London Property Investments (UK) Ltd [2022] EWHC 2862 (Ch), holding that the test is objective, that a website is a promotion, and that “in the course of business” is a less stringent test than carrying on business “by way of business”. FCA FG24/1, its finalised guidance on financial promotions on social media of March 2024, takes the same position: where an affiliate marketer posts a promotion carrying a firm’s referral link, the FCA may treat the firm as causing that communication to be made, even though the firm did not develop, create or control the content. The firm did not write the post; it answers for it.
The FCA reads the “in the course of business” test as requiring a commercial interest which need not be direct, and as capturing any level of commerciality. An influencer paid by the platform for traffic, or posting in anticipation of a future relationship with the firm, is caught with no contract and no fee. An unapproved post is then an illegal financial promotion and a criminal offence under section 25 FSMA, carrying up to two years’ imprisonment on indictment. The section 25(2) defences are reasonable grounds for believing the content was prepared, or approved, by an authorised person, and all reasonable precautions and due diligence; both depend on records influencers rarely keep.
No exemption rescues an affiliate marketing post to a general retail audience. The Financial Promotion Order exemptions are built round identified recipients, signed investor statements or the absence of an organised marketing campaign, and a paid social post to a following satisfies none of them. The Upper Tribunal read the exemptions strictly to their exact terms in Promethean Finance Ltd v Financial Conduct Authority [2024] UKUT 229 (TCC).
The section 55NA gateway and who may approve
The approval route narrowed in 2024. Section 21(2A) FSMA permits an authorised person to approve a promotion only where section 55NA, inserted by section 20(3) of the Financial Services and Markets Act 2023, allows it, or where an exemption made under section 55NB applies. Regulation 3 of the Financial Services and Markets Act 2000 (Exemptions from Financial Promotion General Requirement) Regulations 2023 sets out three narrow exemptions: the approver prepared the content itself; approver and communicator belong to the same group; or an appointed representative prepared the content. Everything else needs approver permission through the financial promotions gateway, which has applied since 7 February 2024. Section 55NA(8)(a) lets the FCA cancel that permission where a firm has not used it for twelve months, so a firm cannot bank it and leave it dormant.
The Court of Appeal settled what an approver must know long before the gateway. In Financial Services Authority v Fox Hayes (a firm) [2009] EWCA Civ 76 it held a firm of solicitors liable for approving promotions for unauthorised overseas companies, imputing the composite knowledge of the whole firm so that a conflicted partner’s knowledge could not be ring-fenced. Nobody has yet litigated section 55NA. Fox Hayes remains the best guide to what an approver is expected to know about the promoter it lends its permission to.
What the rules require of a firm and its approver
FG24/1 paragraph 3.15 tells firms to sign off digital media communications “in line with the requirements of” SYSC 3 and SYSC 4. SYSC 1 Annex 1 applies SYSC 2 and SYSC 3 only to an insurer, a UK ISPV, a managing agent and the Society of Lloyd’s. SYSC 3 does not bind a consumer credit firm, an investment platform, a payment institution or an e-money institution. For the consumer credit firm and the investment platform the obligation is SYSC 4. SYSC 4 does not reach a payment institution or an e-money institution either: SYSC 1.1A.1BG provides that Chapter 15A of that sourcebook also applies to them, which is the only route by which SYSC reaches them at all. What binds all four is Principle 3, applied to payments firms by PRIN 3.1.1AR, and FG24/1 cites Principle 3 correctly five paragraphs later. Guidance cannot widen a rule’s application, and neither can a correction.
COBS 4.10.2R(1A) requires an approver to take reasonable steps to monitor an approved promotion’s continuing compliance for as long as it is communicated, and COBS 4.10.2R(1B) requires a written quarterly attestation from the unauthorised person that nothing material has changed. On becoming aware that the promotion no longer complies, COBS 4.10.2R(2) requires the firm to withdraw the approval and tell anyone it knows is relying on it. COBS 4.10.9AR requires the individual responsible for compliance to have appropriate competence and expertise in the investment or service promoted, a harder test than the seniority the guidance describes. Records belong under SYSC 9 and COBS 4.11, and a firm cannot leave the social media platform to hold them.
A firm holding approver permission reports half yearly under SUP 16.31, within 30 business days of each period end. Two events carry a seven-day notification under SUP 16.31.5R: approving a promotion for a non-mass market investment or a qualifying cryptoasset, and amending or withdrawing an approval because of a notifiable concern. The second arises most often on an affiliate programme.
Unenforceable contracts and the Consumer Duty overlay
Section 30 FSMA makes a controlled agreement entered into in consequence of an unlawful communication unenforceable against the customer, and entitles the customer to recover money or property paid and to compensation for loss. The court may allow enforcement where that is just and equitable. The section 25 offence and FCA enforcement run alongside it, and sections 382 and 384 add a restitution jurisdiction. Section 30 is the only unenforceability route for a section 21 breach; sections 26 and 27 attach to the general prohibition in section 19, which is a different contravention. A firm can breach section 21 without breaching section 19, and still find its book unenforceable.
PRIN 3.1.1AR extends the Principles to e-money institutions, authorised payment institutions, small payment institutions and registered account information service providers, so a payments firm outside the financial promotion restriction is still inside PRIN 2A. PRIN 2A.5.3R requires communications to equip retail customers to make effective and properly informed decisions, and PRIN 2A.5.10R requires firms, where appropriate, to test them before use and monitor them afterwards. BCOBS 2.2.1R separately requires a payment institution or e-money institution promoting its own product to make the promotion fair, clear and not misleading. The FCA is moving to outcomes and away from prescription, as it proposed for consumer credit promotions in CP26/15; the consumer credit financial promotions consultation has the detail. Less prescription does not reduce exposure; it puts the firm to proof.
Viewpoint
I read the enforcement figures as a criminal-law problem for promoters and a records problem for firms. The arrests and the takedowns fall on the influencer and the platform, neither of which an authorised firm controls. What the firm does control is the approval file: what it approved, when it approved it, whether the affiliate’s post still says the same thing, and whether it can prove any of that a year later. FG24/1 asks firms how many affiliate partnerships they can maintain before adequate monitoring stops being possible, and declines to give a number.
The FCA’s own guidance is not a safe harbour. FG24/1 tells firms to sign off promotions in line with SYSC 3, which does not apply to the firm types the guidance addresses. A control documented against the wrong provision is not a control; the Application provision has to be read before the substantive rule. The question for any firm running an affiliate programme is which of its products is a controlled activity or a controlled investment, and whether anyone has written that answer down.
Frequently asked questions
Does section 21 FSMA apply to promotions of payment services or e-money?
No. The financial promotion restriction applies only to invitations or inducements to engage in investment activity, which means a controlled activity or controlled investment specified in Schedule 1 to the Financial Promotion Order 2005. Payment services are not listed, and PERG 8.7.2G confirms that electronic money is not a controlled investment, so section 21 does not apply to a communication concerning it unless the communication is a financial promotion for some other reason.
Who is liable for finfluencer financial promotions, the firm or the influencer?
Both can be. The influencer commits a criminal offence under section 25 FSMA if the promotion was not approved and no exemption applies. The authorised firm carries the regulatory liability, because section 21(13) FSMA treats causing a communication to be made as communicating it, applied in FCA v London Property Investments (UK) Ltd [2022] EWHC 2862 (Ch), and FG24/1 states that a firm whose referral link appears in an affiliate’s post may be causing that communication to be made.
Can a payment institution or e-money institution approve a financial promotion?
No. Approval under section 21(2A) and section 55NA FSMA is open only to an authorised person, and approver permission attaches to a Part 4A permission. A payment institution authorised under the Payment Services Regulations 2017, or an e-money institution authorised under the Electronic Money Regulations 2011, is not an FSMA authorised person and cannot hold approver permission on that authorisation alone. It must instruct an external approver.
What happens to the contract if the promotion was unlawful?
Section 30 FSMA makes a controlled agreement entered into in consequence of an unlawful communication unenforceable against the customer, and entitles the customer to recover money or property paid and compensation for loss. The court may allow enforcement where it is just and equitable to do so. Sections 382 and 384 give the FCA and the courts a restitution jurisdiction in addition.
Does an influencer need to be paid for a post to be a financial promotion?
No. The FCA reads the “in the course of business” test in section 21 FSMA as requiring a commercial interest which does not have to be direct, and as capturing any level of commerciality. An influencer who earns platform revenue from views, or who posts in anticipation of a future relationship with the firm, is likely to be communicating in the course of business.
For advice on whether an affiliate programme falls inside the section 21 perimeter, on approver permission under the financial promotions gateway, or on a financial promotions file under FCA scrutiny, contact Rob Bratby at Bratby Law. Bratby Law advises payments firms, e-money institutions and consumer credit firms on regulatory perimeter and market entry questions and on FCA investigations and enforcement.
