Category: Compliance & AML · Reviewed by Jake Leat, Associate Director · Last reviewed June 2026
The foundational FCA financial promotions rule, requiring that any communication to a client about designated investment business be clear, fair and not misleading — the same standard is mirrored in ICOBS 2 for insurance distribution.
COBS 4.2.1R is the “fair, clear and not misleading” rule. It is the FCA’s master test for the way authorised firms communicate with clients and potential clients in relation to designated investment business. The substantively equivalent rule for insurance distribution sits at ICOBS 2.2.2R, and a similar rule applies to financial promotions to retail clients generally via section 21 FSMA approval requirements.
FCA Handbook, COBS 4.2.1R. Made under FSMA section 137R (financial promotions). The same standard is embedded in section 21 FSMA — the financial promotion regime — and in PRIN 7 (Communications with clients) and PRIN 12 (Consumer Duty).
The rule applies to a communication or financial promotion made to (or directed at) a client or potential client. “Fair” means presenting risks and benefits in proportion. “Clear” means understandable to the intended audience without specialist knowledge. “Not misleading” means not creating a false impression by what is said, what is omitted, or how prominently information is presented. Risk warnings cannot be in small print where the headline claim is large.
For pure insurance distribution the operative rule is ICOBS 2.2.2R, with the same words. For Section 21 approvals (financial promotions by unauthorised persons approved by authorised persons), the FCA’s Gateway regime applies under the Financial Services and Markets Act 2023.
A website headline saying “Save up to 40% on commercial property insurance” must be supported by evidence that the saving is realistic for a representative subset of customers. Any qualifier (“eligibility criteria apply”, “average saving”), and any countervailing information about cover differences, must be sufficiently prominent that a reasonable customer is not misled.
FCA Handbook, COBS 4.2.1R. Financial Services and Markets Act 2000, section 137R. Financial Services and Markets Act 2023 (Section 21 financial promotion approval gateway).
By Matt Bartlett, Director, on 2026-06-11.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-11. Apex Insurance Brokers Limited, FCA FRN 724952, Companies House 07014570. Not regulated advice — consult your broker on your specific position.
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