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Legal Services > Financial Services > Flashcards

Financial Services Flashcards

1
Q

Who is the designated professional body for lawyers

A

SRA

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2
Q

Who authorises businesses conducting regulated activities

A

FCA

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3
Q

Can the FCA require firms to withdraw or amend misleading financial promotions

A

Yes with immediate effect

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4
Q

Can the FCA block the launch or stop a service or product

A

Yes

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5
Q

Can anyone carry out regulated activities

A

No S19 FSMA general prohibition unless authorised or exempt

Breach of s19 is a criminal offence

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6
Q

Consequences of breaching s19

A

Criminal offence

Any agreement might be unenforceable

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7
Q

How to tell if an activity is regulated

A

S22
Are you in business
Specific investment, relate to financial standing or setting of a benchmark
Specific activity
If yes to all of above then it is regulated unless you can use an exemption

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8
Q

Is providing or advising on credit about financial standing.

A

Yes

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9
Q

What is a specified investment

A

Stocks, shares, debentures, loanstock, bonds, government securities, open needed investment companies, insurance contracts, home improvement or purchase plans, regulated mortgage contracts, deposits, credit agreements

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10
Q

What is not a specified investment

A

Interest in land or national savings products st

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11
Q

Specified activities

A 
Dealing as an agency 
Arranging
Managing 
Safeguarding 
Advising (specific not generic) 
Lending money on/ administering a regulated mortgage
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12
Q

What are the exclusions

A 
Introducing 
ATP
Execution only
Acting as trustee or PR
Professional / necessity 
Takeover
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13
Q

Which exclusions cannot be used for insurance contracts and require you to account to client for money

A

ATP
Execution only
Trustee/PR
Professional/ necessity

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14
Q

Which specified activities can the introducing exclusion be used for

A

Arranging

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15
Q

Which specified activities can the ATP exclusion be used for

A

Dealing as an agent

Arranging

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16
Q

Which specified activities can the execution only exclusion be used for

A

Dealing as an agent

Arranging

17
Q

Which specified activities can the acting as a trustee or PR exclusion be used for

A 
Arranging 
Managing 
Safeguarding 
Advising trustees or beneficiaries 
Lending or administering a mortgage
18
Q

Which specified activities can the professional/necessity exclusion be used for

A

Advising, arranging, safeguarding and dealing as an agent

19
Q

Which exclusions do not allow you to be remunerated separately

A

Trustee/ PR- cannot be paid above normal allowance for trustee/PR duties

Professional/necessity - cannot be remunerated separately for regulated activities LLM

20
Q

Which specified activities can the takeover exclusion be used for

A

Arranging, advising, dealing as agent

21
Q

When can the takeover exclusion apply

A

50% or more of voting shares and between a body corporate, partnership or individuals

Can be to sell just some shares, doesn’t need to be all of them. As long as it’s at least 50%. Add what they already have to what they’re buying to see if it’s at least 50%

Also if not 50% but acquiring day to day control of the body

22
Q

Requirements for relying on s327 exemption for professional firms

A

Must not receive any pecuniary or other advantage from someone other than the client which you don’t account for to the client

Must be incidental to provision of services by firm (specific test)

Must carry out only regulated activities by DPB (general test)

Activities must not be prohibited by treasury or FCA

Firm must not carry out any other regulated activities

23
Q

What is the s327 specific test

A

Regulated activities must arise out of professional service to client. Must be linked and must be to the same person

24
Q

What is the s327 general test

A

Activities that would otherwise be regulated activities cannot be a major part of firms activities

25
Q

Which rules must a firm comply with the relying on s327 exemption

A

SRA financial services (scope) rules and SRA conduct of business rules

26
Q

Who cannot use s327 exemption

A

Firms authorised by FCA for other non-mainstreaming regulated activities where they are authorised to carry out defined regulated activities

27
Q

What do the SRA financial service (conduct of business) rules do

A

Regulate the way a firm undertakes financial services under s327

28
Q

What must you do for an execution only client with a retail investment product

Under SRA financial service (conduct of business) rules

A

Write to client to confirm they’re not relying on advice of solicitor and firm must keep a copy of the letter

29
Q

What must you tell clients about FCA when using s327

According to SRA financial service (conduct of business) rules

A

Tell clients you’re not authorised by the FCA but they can complain to SRA or legal ombudsman

30
Q

How must you behave when relying on s327

According to SRA financial service (conduct of business) rules

A

Act in clients best interests and complete transaction ASAP unless not in their best interests

31
Q

Recording keeping requirements when working under s327

According to SRA financial service (conduct of business) rules

A

Must keep records of instructions

Must record commissions received for regulated activities and how they were dealt with

32
Q

What info must you provide client with when acting under s327

According to SRA financial service (conduct of business) rules

A

Info regarding remuneration for contract of insurance must be provided to client before conclusion of initial contract

33
Q

Can a firm conduct consumer credit activity

A

To conduct consumer credit activity you must be authorised by FCA or rely on s327

Conducting litigation regarding credit or hire agreements is not consumer credit activity.

Allowing clients time to pay is exempt if no more than 12 payments across max 12 months an no interest or other charges

34
Q

Can anyone make financial promotions

A

No s21 FSMA - cannot make financial promotions unless content approved by authorised person

35
Q

FSMA 2000

A

Financial services and markets act 2000

36
Q

What is a financial promotion

A

Communicating an invitation or inducement to engage in investment activities

37
Q

Test to determine if you are making a financial promotion

A

Are you in business?

Are you making an invitation or inducement in connection with an investment or investment activity?

38
Q

When can a solicitor make real time communications to introduce a client to an ATP

A

Solicitor is not close relative of ATP
Solicitor doesn’t get pecuniary reward or advantage other than from client
Solicit not giving advice regarding merits of investment

39
Q

What are the two exemptions for making financial promotions

A

Real time promotions to a client who has already engaged the solicitor where the controlled activity promoted is exempt or excluded and the controlled activity would be incidental to the professional services.
Solicitor must reasonably believe that client understands risks and at the time would expect to be contact by solicitor regarding that activity

Non real time promotions- must contain specific statements

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