5. Financial Services Flashcards
What is the general prohibition under the Financial Services and Markets Act 2000?
No person may carry on a regulated activity in the UK unless they are authorised or exempt from authorisation
What is a regulated activity?
A specified activity in relation to a specified investment carried out in the course of business to which no exclusions apply
What are the five specified activities which are regulated?
ADAMS
- Advising
- Dealing as Agent
- Arranging
- Managing
- Safeguarding
What is advising?
Giving advice to an investor on the merits of buying, selling, subscribing for, or underwriting a particular investment
What is dealing as an agent?
Actually buying, selling, subscribing for, or underwriting a particular investment for another person
What is arranging?
Making arrangements for another person to buy, sell, subscribe for, or underwrite a particular investment
What is managing?
Managing assets belonging to another person in circumstances which involve the exercise of discretion
What is safeguarding?
Protecting and administering assets belonging to another person
What are the six specified investments most relevant to a solicitor which are regulated?
I Should Drink Milk for Power and Fun
1. Insurance contracts
2. Shares/securities
3. Debentures
4. Mortgage contracts
5. Pension schemes
6. Funeral plans
What are two things which are not specified investments?
- Interests in land
- National savings products, e.g. Premium Bonds
When must the conduct be carried out to breach the general prohibition?
In the course of business
What is the Designated Professional Bodies exemption which means a regulated activity would not violate the general prohibition at all?
If a solicitor provides a regulated activity incidentally to the provision of legal advice and does not receive compensation for this from anyone else without accounting to the client for it, it is exempted
So, for example, you might have:
- provided debt counselling in respect of joint credit card debts in a matrimonial matter
- advised a client on how they should invest monies when advising on a will or probate matter.
How is whether an activity is incidental determined for the purposes of the Designated Professional Bodies exemption?
By considering whether the activity is incidental:
- To the work the firm does as a whole, and
- To the client’s particular matter
What are some limitations of the Designated Professional Bodies exemption?
It does not apply to activities contained in the SRA Financial Services (Scope) Rules
What are some activities in the SRA Financial Services (Scope) Rules to which the Designated Professional Bodies exemption does not apply?
- Recommending a client get rid of any rights under a personal pension scheme
- The firm entering into a regulated credit agreement as lender (except in relation to the firm’s fees)