Financial Promotions and Advertising

Why do you need to know?

The Financial Services and Markets Act 2000 (FSMA) and the FSMA Act 2023  states that only authorised firms can communicate financial promotions except where the communication has been approved by an authorised firm. This means that credit unions are legally permitted to promote their financial services and can approve the content of financial promotions delivered by Third parties.

Where communicating financial promotions credit unions should comply with the Advertising Standards Authority (ASA) Code of Advertising Practice and the spirit of the Consumer Credit Act. Credit unions greatly benefit from their exemption from the Consumer Credit Act and should adhere to its principals on advertising to ensure that this exemption is maintained.

The Key Points

• FCA regulates financial promotions in regard to savings, investments, and consumer credit advertising.
• FCA defines a financial promotion as a ‘communication that is an invitation or an inducement to engage in investment activity conducted in the course of business.’  This includes credit union savings and loans. The information you provide that merely informs or educates will not normally be a financial promotion.
• Financial promotions and advertising can be written, face to face, electronic or telephone communications, e.g. leaflets, posters, presentations, radio adverts, and websites.
• All financial marketing communications are subject to Advertising Standards Authority Code rules that cover non-technical elements of communications; for example, serious or widespread offence, social responsibility and the truthfulness of claims that do not relate to specific characteristics of financial products.
• Financial promotions should be treated as part of the FCA’s overarching Treating Customers Fairly initiative.
• In addition to considering the content of any advertising initiative, credit unions should consider data protection regulations where they are sending promotions directly to individuals. ABCUL has guidance on complying with data protection requirements around direct marketing
• FCA Finalised Guidance FG24/1 (March 2024) clarified how financial promotions should be conducted across digital media, including websites, social platforms, and affiliate marketing. It emphasises that each promotion must be standalone compliant, with clear risk warnings and appropriate oversight of third-party content.

Putting into Practice

FCA principles

When making new financial promotions, or updating old ones, you should adhere to the 3 simple principles which the FCA has stated; financial promotions should be clear, fair and not misleading i.e.

Clear 

The communication:

• Is clearly a financial promotion
• Uses plain and intelligible language
• Is easily legible (or, in the case of any information given orally, clearly audible)
• Is presented in a way that is likely to be understood by the average member of the group to which it is directed or by which it is likely to be received
• Specifies the name of the firm whose financial product is being promoted

Fair

The financial promotion:

• Is balanced and, in particular, does not emphasise any potential benefits of a product or service without also giving a fair and prominent indication of any relevant risks;
• where it contains a comparison or contrast, this is presented in a fair and balanced way and is meaningful

Not misleading

The financial promotion:

• Is accurate
• Does not disguise, omit, diminish or obscure important information, statements or warnings
• Does not use any false information such as false testimonials, endorsements or case studies or make any unsubstantiated claims to the firms size or experience.
• Must not create misleading expectations on the future performance of a product (e.g. by cherry-picking the best of the last 5 years worth of dividend results)

More detail can be found in the Consumer Credit Handbook.

Ban on Canvassing

Under Section 48 of the Consumer Credit Act 1974 it is an offence to canvass credit or hire agreements off trade premises. This would include, for example, a firm’s staff or representatives knocking on doors to sell loan agreements to members of the public.

Ban on circulars to minors 

Under Section 50 of the Consumer Credit Act it is an offence to, knowingly, and with a view to financial gain, send a minor any document inviting him or her to borrow money or otherwise obtain credit for goods or services.

Financial Promotions in detail

Particular guidance is given for certain types of financial promotions. You should take these things into account when establishing and maintaining the financial promotions of your credit union.

Advertising Savings

It is important for your credit unions to attract savers. However, there are certain compliance issue associated with advertising an attractive dividend; mainly that the dividend must be set by the Board and agreed at the AGM so cannot be advertised as a fixed rate.

The FCA has advised that credit unions should avoid advertising a dividend because it is subject to a credit union’s future financial performance and presents a potential risk;  if the credit union didn’t perform as expected, it would either have to pay out on a dividend it could not afford or invite complaints from members who expected a specific return on their savings.

Although nothing in CREDS prevents you from advertising a dividend, it is prudent to avoid making the commitment. Credit union prudential rules could also prevent the credit union from paying the advertised dividend should paying this dividend mean that the credit union breaches its capital requirements. FCA has said that it would be acceptable for a credit union to express an intention to pay a dividend, as long as it was clear that it was not guaranteed.

For example, phrases such as ‘Targeted Dividend’ or ‘Estimated Dividend’ may be acceptable if provided alongside a suitably clear and prominent statement to the effect of: “This rate is not guaranteed. The final dividend paid may vary and it is possible for that no dividend is paid at all”.

Where interest is paid and certain requirements are met then this rate can be advertised, but must be accrued for payment.

Past Performance (required) 

FCA (COBS 4.6.2) states that you must ensure that if information contains an indication of past performance, that statement must not be the most prominent feature of the communication and should provide figures covering the preceding 5 years.

You must also clearly state the source of the information, a prominent statement that the figures refer to past performance and are not a reliable indicator of future results or payments and if the figure is based on gross performance, the effect of commissions, fees or other charges must be disclosed.

Wording

You must be careful with the type of wording you use around savings, e.g. you may want to encourage people to “invest” in their local credit union through regular savings but “invest” and “investing” are defined terms within the Handbook and so these words can only be used in a specific context.

The FCA is not keen on the use of vague statements, e.g. “competitive savings”, as it is difficult to know what this means and so could be seen to be misleading.   

Advertising Credit

Credit union loans are exempt from Consumer Credit Act and the Consumer Credit Directive but you would be expected to comply with the spirit of the Act.

Displaying certain financial information will trigger the requirement to display other key information as shown in the table below:

Further guidance on the representative APR

This is an APR at or below which the advertiser reasonably expects, at the date on which the advertisement is published, that credit would be provided under at least 51% of the agreements which will be entered into as a result of the advertisement.

APR must be rounded to one decimal point and 26.82% (2% per month) should read 26.8% APR.

For more information about the calculation of the APR please see our guide on Interest Rate Calculations.

Further guidance on the representative example 

The representative example must be representative of the credit agreements the credit union reasonably expects to be entered into as result of the financial promotion on the date which the financial promotion is made.  This is not limited to agreements featured in the promotion if the credit union expects other agreements (e.g. with different rates or amounts) to be entered into as a result of the advertisement.

The example is unlikely to be representative if, for example, most customers entering into agreements as a result of the financial promotion are likely to do so for a lower amount of credit than indicated in the example, or with higher rates of interest or other charges than those indicated in the example.

The representative example must be accompanied by the words “representative example”. Each item on the list (a-h in the table above) should be given equal weighting and should be no less prominent than any other information relating to the cost of credit. Other examples may also be included, but must be no more prominent than the overall representative example. The prominence rule does not however apply to non-cost information.

The total amount of credit equates to the sum available to the customer to use and does not include charges which are financed by the credit agreement; those are part of the total charge for credit.

The rate of interest used in the representative example can be an annual, monthly or daily rate. Any amount relating to the cost of credit must include fees and charges.

If an interest rate or charge applies only for a limited period, the duration of the period and the rate or amount following that period, if known or ascertainable should be shown.

It is also advisable, that if you use a comparison against another lender that you show the source and date of the information used (i.e. web site and date)

Example: Representative Example

Advertising Standards Authority Code

The UK Code of Non-broadcast Advertising, Sales Promotion and Direct Marketing (the CAP Code) will apply in full to marketing including:

• Advertisements in newspapers, magazines, brochures, leaflets, circulars, mailings, emails, texts, fax, catalogues and other electronic or printed material
• Posters and other promotional material in public places, including moving images
• Cinema, video, DVD and Blu-Ray
• Advertisements in non-broadcast electronic media including: Online advertisements in paid-for space (e.g. banners or pop-up advertisements); paid for search listings; preferential listings on price comparison websites; viral advertisements; in game advertisements; commercial classified advertisements; advertisements distributed through web widgets and online promotions and prize promotions.

The central principle for all marketing communications is that they should be legal, decent, honest and truthful. All marketing communications should be prepared with a sense of responsibility to consumers and society and should reflect the spirit, not merely the letter, of the Code.

You must make sure all your advertising complies.

Details of the code can be found on the Advertising Standards Authority (ASA) website which also features an area for financial services that includes news and information on rulings on financial firm’s ads.

Website Promotions

The rules for other financial promotions apply equally to web promotions. However it is important that members using the web have the opportunity to view the full text of the relevant key features and terms and conditions; this can be done through the use of hyperlinks.

You may also include a reference or hyperlink to the FCA website from your website.

Further information

The Financial Conduct Authority (FCA) is responsible for supervising compliance with the Financial Services and Markets Act and the Consumer Credit Act and it’s relevant regulations can be found in:

• Consumer Credit: CONC 3
• Retail investments: COBS 4
• The perimeter guidance manual: PERG 8
• FCA Financial Promotions PageGuidance: https://www.fca.org.uk/firms/financial-promotions-adverts

The Advertising Standards Code: http://www.cap.org.uk/Advertising-Codes/Non-broadcast-HTML.aspx

Last reviewed (31/07/25)