Financial Services

Question 1

What are the key objectives of the Financial Conduct Authority?

Answer 1

1. Protecting consumers
2. Protecting financial markets
3. Granting approved person status

Question 2

What is approved person status granted by the FCA?

Answer 2

Status granted to persons who undertake regulated financial services activities

Question 3

Explain what a General Prohibition is?

Answer 3

Prohibition on undertaking a regulated activity

Question 4

What is a regulated activity?

Answer 4

• Specified activity in relation to a specified investment
• is carried out in the course of business
• no exclusions apply

Question 5

What are the regulated activities?

Answer 5

1. Advising
2. Arranging
3. Dealing as agent
4. Managing
5. Safeguarding

Question 6

What is “advising” as a regulated activity?

Answer 6

Giving advice to an investor/potential investor (or their agent) on merits of buying/selling/subscribing/underwriting an investment

Question 7

What type of advice is not advising ?

Answer 7

Generic advice

Question 8

What is arranging?

Answer 8

arranging for another person to buy/sell/subscribe/underwrite an investment

Question 9

What is “dealing as agent”?

Answer 9

Buying/selling/underwriting investments as agent for a client

Question 10

What is “managing”?

Answer 10

managing assets belonging to another person in circumstances involving the exercise of discretion

Question 11

What is safeguarding?

Answer 11

Safeguarding assets belonging to another and administering them

Question 12

What are regulated investments?

Answer 12

• Insurance contracts
• Shares and securities
• Debentures
• Mortgage contracts
• Pension schemes
• Funeral plans

Question 13

What are NOT regulated investments

Answer 13

Interests in land
Some national savings products (Premium Bonds)

Question 14

When will a solicitor fall within an exception to a regulated activity?

Answer 14

If they provide the advice outside of their business (i.e. personal capacity)

Question 15

What are the exclusions to the General Prohibition and to which investments do they NOT apply?

Answer 15

1. Takeover exclusion
2. Acting as trustee, nominee or personal representative
3. Introducing or acting through an authorised person
4. Reasonably regarded as necessary exclusion

Does NOT apply to insurance policies or contracts

Question 16

What is the takeover exclusion?

Answer 16

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

Question 17

What is the acting as trustee, nominee or personal representative exclusion?

Answer 17

When you advise, arrange, manage, safeguard investments as trustee, nominee or personal rep

Question 18

What is introducing or acting through an authorised person

Answer 18

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

Question 19

What is the “reasonably regarded as necessary” exclusion?

Answer 19

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

Question 20

Explain the incidental activities of members of designated professional bodies under the FSMA?

Answer 20

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

Question 21

How do you know if an activity is incidental to the legal advice?

Answer 21

1. Is it incidental to the work the firm does as a whole
2. Is it incidental to the client’s particular matter?