Financial Services Flashcards
What are the key objectives of the Financial Conduct Authority?
- Protecting consumers
- Protecting financial markets
- Granting approved person status
What is approved person status granted by the FCA?
Status granted to persons who undertake regulated financial services activities
Explain what a General Prohibition is?
Prohibition on undertaking a regulated activity
What is a regulated activity?
- Specified activity in relation to a specified investment
- is carried out in the course of business
- no exclusions apply
What are the regulated activities?
- Advising
- Arranging
- Dealing as agent
- Managing
- Safeguarding
What is “advising” as a regulated activity?
Giving advice to an investor/potential investor (or their agent) on merits of buying/selling/subscribing/underwriting an investment
What type of advice is not advising ?
Generic advice
What is arranging?
arranging for another person to buy/sell/subscribe/underwrite an investment
What is “dealing as agent”?
Buying/selling/underwriting investments as agent for a client
What is “managing”?
managing assets belonging to another person in circumstances involving the exercise of discretion
What is safeguarding?
Safeguarding assets belonging to another and administering them
What are regulated investments?
- Insurance contracts
- Shares and securities
- Debentures
- Mortgage contracts
- Pension schemes
- Funeral plans
What are NOT regulated investments
Interests in land
Some national savings products (Premium Bonds)
When will a solicitor fall within an exception to a regulated activity?
If they provide the advice outside of their business (i.e. personal capacity)
What are the exclusions to the General Prohibition and to which investments do they NOT apply?
- Takeover exclusion
- Acting as trustee, nominee or personal representative
- Introducing or acting through an authorised person
- Reasonably regarded as necessary exclusion
Does NOT apply to insurance policies or contracts
What is the takeover exclusion?
When you deal as agent or arrange/advise a client who is buying/selling more than 50% of voting shares of a Company OR where control is changing hands
What is the acting as trustee, nominee or personal representative exclusion?
When you advise, arrange, manage, safeguard investments as trustee, nominee or personal rep
What is introducing or acting through an authorised person
Introducing a client to an FCA authorised person in order for the client to recieve advice or acting as agent or arranging where the solicitor recieves advice from an authorised person
NOT if the solicitor receives payment/commission from the authorised person
What is the “reasonably regarded as necessary” exclusion?
When you carry on an activity (other than managing assets) relating to specified investments if it is necessary part of providing the legal services.
No billing separately from main advice
Explain the incidental activities of members of designated professional bodies under the FSMA?
Solicitors providing financial services that are complementary or arise out of legal services
No compensation recieved without accounting for it
Services will be exempt q
How do you know if an activity is incidental to the legal advice?
- Is it incidental to the work the firm does as a whole
- Is it incidental to the client’s particular matter?
