The basic restriction on the communication of financial promotions is in section 21(1) of the Act. Sections 21(2) and (5) disapply the restriction in certain circumstances. Their combined effect is that a person must not, in the course of business, communicate an invitation or inducement to engage in investment activity unless:
Section 21 of the Act does not itself (other than in its heading and side-note) refer to a 'financial promotion' but rather to the communication of 'an invitation or inducement to engage in investment activity'. References in this guidance to a financial promotion mean an invitation or inducement to engage in investment activity.
Section 21 of the Act was commenced, for most purposes, on 1 December 2001. However, it did not come into effect as respects financial promotions about funeral plan contracts until 1 January 2002 and will not come into effect for financial promotions about agreements for qualifying credit until a date in 2004 yet to be set by the Treasury. Guidance on the application of section 21 to financial promotions about funeral plans is in AUTH App 1.16.