FCA Financial Promotions: Identifiability and Compensation Disclosure (COBS 4.3-4.5)
Identifiability, Comparisons, and Compensation Disclosure [COBS 4.3-4.5]
Rule: Financial promotions must be clearly identifiable as marketing communications, contain fair comparisons when contrasting products, and disclose compensation scheme membership to retail clients. These transparency requirements ensure consumers can distinguish promotional content from independent information.
COBS 4.3: Identifiability and Comparisons
COBS 4.3.1R: Identifiable as Marketing
A firm must ensure that:
A financial promotion addressed to a client is clearly identifiable as such.
Purpose: Ensure recipients recognize they are viewing promotional content, not independent information or advice.
“Clearly identifiable” means:
- Reasonable person can tell it’s a promotion
- Not disguised as neutral information
- Distinct from editorial content
- Purpose (to promote) is transparent
What Counts as “Clearly Identifiable”?
Sufficient indicators:
| Medium | Acceptable Identification |
|---|---|
| Social media | #ad, #sponsored, “Ad”, “Promoted post” |
| Websites | ”Advertisement”, “Promotional content”, visual distinction |
| Subject line or header: “Marketing communication” | |
| Print/broadcast | ”Paid advertisement”, “Sponsored content” |
| Influencer posts | Clear disclosure: “Paid partnership with [Firm]“ |
| Native advertising | ”Sponsored by [Firm]”, visual/text label |
Insufficient (misleading):
- Buried disclosure at bottom in tiny text
- Vague language: “In association with”
- Promotional content styled as news article without clear label
- Influencer post without disclosure of payment
COBS 4.3.2R: Comparisons Must Be Meaningful and Fair
If financial promotion includes a comparison or contrast:
Must comply with requirements for comparative information in COBS 4.9.3R and COBS 4.9.4G.
Fair comparison requirements:
1. Must be meaningful
- Compare like with like
- Relevant features selected
- Material differences highlighted
2. Must be clear
- Basis of comparison stated
- Date of comparison provided
- Sources identified
3. Must not be misleading
- Cherry-picked data prohibited
- Must show full picture
- Cannot omit material negatives
4. Must be up-to-date
- Based on recent data
- Note if comparison is historical
- Update when material changes occur
Examples of Comparisons
Example 1: Fund Performance Comparison
Compliant:
“Our UK Equity Fund returned 8.5% over 12 months to 31 Dec 2025, compared to FTSE 100 index return of 6.2% over same period. Past performance is not a reliable indicator of future results. Source: FE Analytics.”
Non-compliant:
“Our fund beat the market!” [No specifics, no timeframe, no source, no warnings]
Example 2: Fee Comparison
Compliant:
“Our platform fee: 0.35% p.a. Competitor average: 0.45% p.a. (Source: Platforum Q4 2025 report comparing 15 major platforms for portfolios £50k-£100k. Excludes fund charges.)”
Non-compliant:
“Lower fees than competitors” [No data, no source, no basis]
Example 3: Product Feature Comparison
Compliant table:
| Feature | Our ISA | Competitor A | Competitor B |
|---|---|---|---|
| Annual charge | 0.25% | 0.35% | 0.45% |
| Funds available | 3,000 | 2,500 | 4,000 |
| Minimum investment | £500 | £1,000 | £100 |
| Free switches | Unlimited | 3 per year | Unlimited |
Sources: Provider websites as at 1 Jan 2026. Charges exclude fund costs.
Non-compliant:
- Comparing only features where your product wins
- Using outdated competitor information
- Omitting material disadvantages
COBS 4.3.3G: Disclosure in Context
Guidance: The requirement to identify as marketing communication does not require disclosure on every page of a multi-page website, but:
Must be clear:
- Overall that site is promotional
- When specific product promotions appear
- Distinction from independent information (e.g., educational content)
Practical approach:
- Header/footer: “This is a marketing communication”
- Individual pages promoting products: repeat disclosure
- Educational content: clearly separate from product promotions
COBS 4.4: Compensation Information
COBS 4.4.1R: Disclosure Required for Retail Clients
A firm must ensure that a financial promotion addressed to a retail client contains:
A clear statement that:
- The firm is covered by the FSCS (Financial Services Compensation Scheme), AND
- Information about the extent and level of cover available
Applies to: Non-real-time promotions addressed to retail clients
Purpose: Inform consumers about protections if firm fails
When Disclosure Required
Must disclose FSCS coverage in:
| Communication Type | Disclosure Required? |
|---|---|
| Email marketing to retail | ✅ YES |
| Website product pages | ✅ YES |
| Brochures/printed materials | ✅ YES |
| Social media posts (specific products) | ✅ YES (or link to info) |
| Confirmation statements | ✅ YES |
| Client agreements | ✅ YES |
| Real-time (phone calls) | ❌ NO (but should mention if asked) |
| Image advertising | ❌ NO (no specific products) |
| Communications to professional clients | ❌ NO (exemption under COBS 4.5.8R) |
Content of FSCS Disclosure
Minimum requirements:
1. Membership statement
“[Firm name] is covered by the Financial Services Compensation Scheme (FSCS).”
2. Extent of cover
“FSCS can pay compensation if we cannot meet our obligations. Most types of investment business are covered for up to £85,000.”
3. Where to get more information
“Further information is available from FSCS at fscs.org.uk or by calling 0800 678 1100.”
COBS 4.4.2G: Level of Detail Varies by Medium
Guidance on appropriate disclosure:
Full disclosure (space available):
[Firm name] is covered by the Financial Services Compensation Scheme.
You may be entitled to compensation from the scheme if we cannot meet
our obligations. Most types of investment business are covered for up
to £85,000. Further information about compensation scheme arrangements
is available from the FSCS at fscs.org.uk or by calling 0800 678 1100.
Short form (space limited, e.g., social media):
Protected by FSCS up to £85k. Details: fscs.org.uk
Link approach (digital channels):
[Firm name] is covered by FSCS. See compensation details [hyperlink].
Linked page must include: Full FSCS disclosure per COBS 4.4.1R
Specific FSCS Coverage Levels
For accurate disclosure, note coverage levels:
| Product Type | FSCS Limit | Per Firm or Per Person? |
|---|---|---|
| Deposits | £85,000 | Per person per firm |
| Investments | £85,000 | Per person per firm |
| Home finance intermediation | £85,000 | Per person per firm |
| Insurance | 100% (compulsory), 90% (non-compulsory) | Per claim |
| Pensions | 100% | Per person per firm |
| Debt management | 90% up to £2,500 | Per person per firm |
When to specify: If promotion relates to specific product type, state applicable limit.
Example:
“Bank deposits are protected by FSCS up to £85,000 per person per bank.”
COBS 4.4.3R: Excluded Firms
If firm is NOT covered by FSCS:
Must make clear and prominent statement:
“[Firm name] is not covered by the Financial Services Compensation Scheme. You will not be entitled to compensation if we cannot meet our obligations.”
Why firm might not be covered:
- Overseas firm operating under passporting (EEA firm pre-Brexit)
- Non-UK firm without UK authorization
- Certain specialized firms with alternative compensation arrangements
Must also state:
- Whether alternative compensation scheme applies
- Name and contact details of alternative scheme
- Level of cover under alternative scheme
COBS 4.5: Communications with Clients (Non-Retail)
COBS 4.5.1R: When Client is Not Retail
COBS 4.3 and 4.4 apply unless:
Communication is addressed ONLY to:
- Professional clients, OR
- Eligible counterparties, OR
- Persons in non-EEA states (overseas only)
Effect: Professional/eligible counterparty communications exempt from:
- Identifiability requirement (COBS 4.3)
- Compensation information requirement (COBS 4.4)
But still must comply with:
- Fair, clear, not misleading (COBS 4.2)
- All other applicable COBS 4 rules
COBS 4.5.2G: Mixed Audiences
If promotion may be seen by retail AND professional:
Apply retail rules (including COBS 4.3 and 4.4) UNLESS:
Option 1: Clear segregation
- State “This communication is for professional clients only”
- Reasonable steps to prevent retail access
- Access controls, separate sections of website
Option 2: Apply retail rules to all
- Safe harbor approach
- Include identifiability and compensation disclosures for everyone
- May be clearer for recipients
Cannot:
- Send to mixed list and claim professional exemption
- Rely on “small print” warning that retail should not read
- Post on public social media and claim professional-only
COBS 4.5.3R: Overseas Communications
COBS 4.3 and 4.4 do not apply if:
Financial promotion is:
- Addressed ONLY to persons outside UK, AND
- NOT directed at persons in UK
“Not directed at UK” means:
- No UK-specific content
- Geo-blocking UK access
- Clear statement: “Not for UK residents”
- No UK contact details or GBP pricing
If promotion accessible in UK:
- COBS 4.3 and 4.4 apply
- Cannot rely on overseas exemption
COBS 4.5.8R: List of Non-Retail Exemptions
Complete list of rules that do NOT apply to professional clients:
| Rule | Requirement | Applies to Retail? | Applies to Professional? |
|---|---|---|---|
| COBS 4.3 | Identifiability and comparisons | ✅ YES | ❌ NO |
| COBS 4.4 | Compensation information | ✅ YES | ❌ NO |
| COBS 4.7.1R | Direct offer financial promotions | ✅ YES | ❌ NO (unless client per se retail) |
| COBS 4.12A | Restricted mass market investments | ✅ YES | ❌ NO |
All other COBS 4 rules apply to professional clients unless explicitly exempted.
Practical Compliance
Identifiability Checklist
For social media posts:
- Use #ad or #sponsored in prominent position
- Disclose paid partnership if applicable
- Not disguised as personal opinion
- Clear firm name and regulatory status
For website content:
- Header or prominent text: “Marketing communication”
- Separate promotional sections from education/information
- Repeat on individual product pages
- Not styled as news article without label
For email marketing:
- Subject line or header includes “Marketing communication”
- Firm name and regulatory status clear
- Unsubscribe option provided (separate requirement)
- Not misleading subject line
For influencer collaborations:
- Influencer discloses paid partnership
- Firm’s approval and monitoring documented
- Clear that it’s a promotion, not independent review
- Firm name and regulatory status disclosed
Compensation Disclosure Checklist
For retail promotions:
- FSCS membership stated
- Coverage level stated (£85,000 for most investments)
- Link or contact details for FSCS provided
- Appropriate detail for medium (full vs. short form)
- Accurate coverage level for specific product type
If NOT covered by FSCS:
- Clear statement: “Not covered by FSCS”
- No compensation available stated
- Alternative compensation scheme disclosed (if any)
- Extra prominent warning given lack of protection
Comparison Checklist
If comparing products or performance:
- Like-for-like comparison
- Basis of comparison stated
- Date/period of comparison provided
- Source data cited
- Material differences highlighted
- No cherry-picking favorable data only
- Up-to-date information used
- Past performance warnings included (if applicable)
Common Mistakes
Mistake 1: Burying identifiability disclosure
- Tiny text at page bottom
- Only on homepage, not product pages
- Vague language: “In partnership with”
- Fix: Prominent, clear label on every promotional page
Mistake 2: Omitting FSCS disclosure
- “Forgot to include it” - common on social media
- Thinking it’s obvious firm is covered
- Fix: Standard template with FSCS disclosure for all retail promotions
Mistake 3: Inaccurate FSCS coverage statements
- Stating “£85,000” for all products (deposits and investments different rules)
- Not specifying per person per firm
- Fix: Check FSCS website for current limits by product type
Mistake 4: Misleading comparisons
- Only showing features where product wins
- Using outdated competitor data
- Cherry-picking best-performing period
- Fix: Balanced comparison with sources and dates
Mistake 5: Assuming professional client exemption with mixed audience
- Sending to mixed list
- Public social media post
- Fix: Either segment audiences or apply retail rules to all
Mistake 6: Native advertising without clear label
- Promotional content styled as editorial
- Influencer posts without #ad disclosure
- Fix: Always label paid content clearly
Recent Enforcement
FCA enforcement on identifiability:
- Social media promotions without #ad
- Influencer collaborations without disclosure
- Fines for misleading consumers
FCA enforcement on compensation disclosure:
- Omitting FSCS information
- Inaccurate statements about coverage
- Failing to update when coverage changes
Trend: FCA increasingly focused on digital/social media promotions lacking identifiability.
Examples
Example 1: Instagram Post (Compliant)
#ad We're excited to announce our new stocks & shares ISA! 🎉
Invest from just £25/month
Over 3,000 funds available
0.25% annual platform fee
[Firm Name] is covered by FSCS up to £85k.
Details: [link to FSCS page]
Capital at risk. Tax rules apply.
Why compliant:
- #ad in prominent position
- FSCS disclosure included (short form appropriate)
- Firm name clear
- Risk warning included
Example 2: Email Marketing (Compliant)
Subject: Marketing Communication - New ISA from [Firm Name]
Dear [Client],
This is a marketing communication.
We're pleased to introduce our new stocks & shares ISA...
[Product details]
[Firm Name] is covered by the Financial Services Compensation Scheme.
You may be entitled to compensation from the scheme if we cannot meet
our obligations. Most types of investment business are covered for up
to £85,000. Further information is available from FSCS at fscs.org.uk
or by calling 0800 678 1100.
Capital at risk. Tax treatment depends on individual circumstances and
may be subject to change.
[Footer with firm details and regulatory information]
Why compliant:
- Identifiable as marketing in subject and body
- Full FSCS disclosure
- Risk warnings included
- Clear firm identity
Example 3: Product Comparison Table (Compliant)
Compare our ISA with leading competitors
(Comparison as at 1 March 2026. Source: Provider websites.)
| Feature | Our ISA | Competitor A | Competitor B | Competitor C |
|------------------|---------|--------------|--------------|--------------|
| Annual fee | 0.25% | 0.35% | 0.45% | 0.25% |
| Funds available | 3,000 | 2,500 | 4,000 | 1,500 |
| Min investment | £25/mo | £50/mo | £100/mo | £100/mo |
| Free switches | Unlimited | 3/year | Unlimited | 6/year |
| Mobile app | Yes | Yes | No | Yes |
Notes:
- Fees exclude underlying fund charges
- All providers covered by FSCS
- Comparison based on publicly available information
- Feature availability may vary by account type
Why compliant:
- Comprehensive comparison (includes where competitors better)
- Date and source stated
- Neutral presentation
- Explanatory notes included
Citation
- COBS 4.3: Communication to clients (including financial promotions)
- COBS 4.4: Compensation information
- COBS 4.5: Exclusions for non-retail clients
- FSCS website
Sources
Related
- Application scope - When COBS 4 applies
- Fair, clear and not misleading - COBS 4.2 baseline standard
- Social media - Practical compliance for social channels
- Back to FCA Financial Promotions overview