Financial Services Flashcards
FSMA 2000 provides?
a regulatory framework for financial services and investments which is supplemented by a number of statutory instruments.
s.19(1) FSMA 2000 (The general prohibition)?
No person can carry on a regulated activity in the UK or purport to do so unless he is an:
authorised person
or exempt person.
s.21(1) FSMA 2000 (Restrictions on financial promotion)?
an unauthorised person cannot in the course of business engage in a financial promotion.
financial promotion?
communicate an invitation or inducement to engage in investment activity.
s.22(1) FSMA 2000 (Regulated activities)?
an activity is a regulated activity if it is an activity of a specified kind which is carried on in the way of business and:
Relates to an investment of a specified kind
OR in the case of an activity of a kind which is also specified for the purposes of this paragraph, is carried on regarding property of any kind.
s.327 FSMA 2000 (Exemption from general prohibition) the general prohibition will not apply to a regulated activity carried on by a firm where:
(7 elements)
There is no direction (under s.328 FSMA 2000) or order (under s.329 FSMA 2000) in force.
The solicitor is a member of a profession.
The solicitor accounts to the client for any pecuniary reward or other advantage received from someone other than the client.
The manner in which the solicitor provides the service is incidental to the provision by him of his professional services.
The activity is covered by rules made under s.332(3) (designated professional bodies) or by an exemption.
The activity is not caught by a prohibition made by the Treasury specifically under s.327(6) FSMA 2000.
The solicitor must not be carrying on other regulated activities except those regarding which he is an exempt person.
If s.327 applies, the professional firm will be treated as…
exempt for the purposes of s.19 FSMA 2000 and be able to carry on a regulated activity.
Compliance with the scope rules and COB rules means that a law firm falls within…
the s.327 exemption for professional firms as permitted by the Professional designated Body (the SRA).
The scope rules set out?
the scope of the activities that a law firm can carry out under the s.327 exemption.
The COB rules regulate the way in which a firm can undertake financial services under…
the s.327 exemption (e.g., administrative and record keeping requirements).
The first element of an activity under s22 FSMA 2000:
and what this includes?
Is it an activity of a specified kind?
This includes (but is not limited to) Part 2 specified activities ROA 2001 –
Dealing in investments as an agent.
Arranging deals in investments.
Managing investments.
Safeguarding and administrating investments.
Advising on investments.
Administrating a regulated mortgage contract.
The second element of an activity under s22 FSMA 2000:
and what this includes?
Is it a specified investment?
This includes, but is not limited to, Part 3 specified investments RAO 2001 –
Deposits
Contracts of insurance
Shares or stocks
Instruments creating or acknowledging indebtedness.
Government and public securities
Units in a collective investment scheme.
Rights under stakeholder pension scheme
Options, futures, contracts for differences.
Regulated mortgage contracts
Rights to or interests in investments.
The third element of an activity under s22 FSMA 2000:
Was the activity carried on by way of business?
A solicitor acting in the course of his profession and practise area will be regarded as having done so by way of business.
The fourth element of an activity under s22 FSMA 2000:
There are specific and… exclusions
Is the activity excluded?
general
specific exclusion?
A specific exclusion depends on the specified investment activities. This includes (but is not limited to) (Part XVII Exclusions applying to specified kinds of activity, RAO 2001):
