Rules and ethics
Angel investing in the UK after the FCA reforms, and what syndicates must change
Angel investing UK has new FCA financial promotion and authorisation rules; here is what syndicates, platforms and founders must change before accepting money.
What to take away
- Since 7 February 2024, PS23/13 requires FCA permission to approve financial promotions for unauthorised people, so most syndicates use an approved platform or become appointed representatives.
- COBS 4 sets promotion content rules, and the high-risk investment rules in force from 1 February 2023 (PS22/10) require risk warnings and ban incentives.
- The certified high net worth and sophisticated investor exemptions remain, now at £170,000 income or £430,000 net assets.
- A nominee can preserve EIS relief, while a pooled SPV can fall inside the collective investment scheme definition in section 235 FSMA 2000.
The rules, the dates and who approves promotions
Section 21 of the Financial Services and Markets Act 2000 bans an invitation to invest. An authorised person must approve it, unless an exemption applies under the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005.
| Source | What it requires | Status |
|---|---|---|
| FSMA 2000, section 21 | Authorised approval or an exemption | In force |
| PS22/10 | Risk warnings, no incentives, appropriateness checks | 1 February 2023 |
| PS23/13 | Permission to approve promotions | 7 February 2024 |
| COBS 4 | Fair, clear and not misleading promotions | Ongoing |
The approver gateway bites hardest on small groups. An approver must judge each promotion and keep records. Most angel clubs cannot staff that role.
COBS 4 of the FCA Handbook holds the risk warning and balance rules that promoters must follow.
Adverts that imply certainty about returns fail those rules. Our guide to funding advert wording shows how scope, approval and EIS statements are checked.
Who counts as a high net worth or sophisticated investor
Articles 48 and 50 of the Financial Promotion Order let a syndicate promote to individuals who certify their own status, the route most angel groups still use.
As part of its review of the exemptions, the FCA raised the high net worth thresholds. Certification now needs £170,000 annual income or £430,000 of net assets, with the main home and pension rights excluded.
A certificate must be dated within the previous 12 months and kept on file. Calling an investor sophisticated without a dated certificate is the gap FCA supervisors look for.
Structure: nominee, SPV or authorised platform
What the founder sees
- Direct
- Each angel on the cap table
- Nominee
- One legal holder, many beneficial owners
- SPV
- One company holds the shares
- Authorised platform
- Platform approves promotions
Regulatory issue
- Direct
- Little for the syndicate
- Nominee
- Nominee terms and records
- SPV
- Possible collective investment scheme
- Authorised platform
- Permissions and supervision
The structure you accept decides your cap table and the syndicate's regulatory burden.
Syndicate structures compared
Direct
- Cap table
- Many angels
- Regulatory issue
- None
- Founder sees
- Each angel
Nominee
- Cap table
- One holder
- Regulatory issue
- Nominee terms
- Founder sees
- Legal holder
SPV
- Cap table
- One company
- Regulatory issue
- May be CIS
- Founder sees
- Single line
In a nominee arrangement the nominee is the legal shareholder while each angel remains the beneficial owner. EIS relief follows the individual subscriber, as the GOV.UK EIS guidance explains.
A pooled SPV holding shares for its members looks like a collective investment scheme under section 235 FSMA 2000 when investors lack day-to-day control. For how the two models differ in practice, see Angel investment networks vs syndicates.
Authorised platforms carry the regulatory burden instead. They approve promotions and supervise leads who act as appointed representatives.
What founders should check before accepting angel money
Run the register checks in order, then work through the documents.
- Search the register for the entity arranging the investment.
- Confirm permissions cover arranging deals and client money.
- Check restrictions and warnings on the record.
- Save a dated copy with the round documents.
Then verify:
- A written syndicate agreement covering fees, decisions and exits.
- Who holds investor money, and in which segregated account.
- A statement of how EIS or SEIS relief is protected.
Founder checks before accepting money
- Check FCA register and permissions
- Ask who approves promotions
- Confirm client money handling
- Review SPV, nominee or direct structure
- Ask about EIS or SEIS eligibility
- Get written agreement on fees and exits
- Verify lead investor identity
A syndicate with no worked example is a warning sign. Ask who represents the investors if the lead leaves, and see our venture capital due diligence questions for the documents investors normally request.
The Digital Markets, Competition and Consumers Act 2024
Platforms answer to two regimes. The Digital Markets, Competition and Consumers Act 2024 bans unfair commercial practices, restricts drip pricing and fake reviews, and adds subscription cancellation duties. Commencement is phased.
An FCA permission does not displace consumer law. A promotion that satisfies COBS 4 can still breach the 2024 Act.
Common questions
Do angel syndicates need FCA authorisation?
Not always. A syndicate that arranges deals in investments and takes a fee usually needs permission or an appointed representative arrangement. A one-off group investing its own money may not.
Who approves a syndicate's financial promotion?
An authorised firm holding the approver permission, unless the syndicate is authorised itself or an exemption applies.
What are the high net worth thresholds?
£170,000 annual income or £430,000 net assets, excluding the main home and pension rights, certified within the past 12 months.
Can an SPV hold EIS shares?
Relief follows the individual subscriber, so a company holding the shares for investors breaks the chain. A nominee that leaves angels as beneficial owners is safer.
