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SQE - LEGAL SYSTEM & Admin Law > Financial Services > Flashcards

Financial Services Flashcards

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1
Q

Who regulates firms & solicitors in ‘regulated activities’?

A

FCA

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2
Q

Who regulates firms in ‘exempt regulated activities’?

A

SRA

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3
Q

What is the primary legislation dealing with financial services?

A

FSMA 2000

Financial Services & Markets Act 2000

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4
Q

What is meant by the general prohibition?

A

The act contains a general prohibition that prevents businesses and individuals from carrying on certain regulated activities without authorisation or exemption

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5
Q

What happens if a business carries out regulated activities?

A

They commit a criminal offence

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6
Q

When will someone be classed as ‘authorised’

A

Where they have obtained authorisation from from appropriate regulator.

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7
Q

FCA is guided by 3 objectives in the Act what are they?

A

Consumer Protection
Integrity of financial systems
Prompting competition in the market

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8
Q

What is regulated activities?
General terms

A

Activities that can only be carried out by those with appropriate authorisation or exempt

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9
Q

What is the 3 components to regulated activities?

A
  1. An activity of a SPECIFIED kind
  2. Relates to a SPECIFIED investment
  3. Carried on by way of business
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10
Q

What are the 5 specified activities?

A
  1. Dealing in investments as agent
  2. Arranging deals in investments
  3. Managing investments
  4. Advising on investments
  5. Safeguarding and Administering investments
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11
Q

Can a solicitor give generic advice on investments

A

Yes - only if SPECIFIC advice is given will this be classed as specified activities

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12
Q

What are specified investments?

A

Stock & Shares
Debentures, loan stock & bonds
G’ment and public securities
Open ended investment companies
Insurance contracts
Regulated mortgage contracts
Home reversion & purchase plans
Deposits
Credit Agreements

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13
Q

What is excluded from specified investments?

A

Interests in land
National savings

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14
Q

What are the 5 exclusions relating to regulated activity?

A

Introducing an authorised person

Arranging or dealing with an ATP

Acting as a trustee, nominee or PR

Activities necessary in business

Activities in sale of a body of a corporate company where shares consist of 50% or more of voting shares

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15
Q

What does designated professional body mean?

A

A firm can carry on exempt regulated activities without being regulated by the FCA

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16
Q

What regulatory body is a designated professional body under the act for solicitors?

A

SRA

17
Q

When can exemption be relied upon by firms?

A

Where the majority of the work the firm carries out is not regulated financial activity

18
Q

If a firm is exempt what can it do?

A

Permitted to carry on certain types of regulated activities known as exempt regulated activities

19
Q

What are exempt regulated activities?

A

Activities carried out by persons exempt from FCA authorisation by way of a designated professional body exemption.

20
Q

What are the conditions that need to be met for solicitors to be exempt from FCA regulation under the SRA who is a designated professional body?

A
  1. Must be a solicitor
  2. Must inform client of any payments from 3rd parties
  3. Financial services must not be a major part of business (incidental)
  4. Activity permitted in the SRA financial services rules
  5. Treasury has a list of activities that cannot be provided
  6. Exemption cannot be used by firms regulated by FCA
21
Q

What does incidental take into consideration when deciding if the financial services are a major part of their work?

A

Scale of regulated activity undertaken

Extent activities are advertised as a separate service

Does the firm specifically advertise regulated activities

A firm cannot offer regulated financial services that are unconnected to a legal matter

22
Q

What rules regulate the way in which exempt professional firms carry on exempt regulated financial services activities?

A

SRA financial services rules

23
Q

What are the SRAs core regulatory requirements:-

A

Rule 2 - status disclosure
Rule 3 - execution of transfers
Rule 4 - records of transactions
Rule 5 - record of commissions
Rule 6 - safekeeping of c’s investments
Rule 7 - execution only business
Rule 8 - retention of records

24
Q

What is the financial promotion prohibition?

A

A solicitor who is not authorised by the FCA must not in the course of business communicate or invite to engage in investment activity

25
Q

What happens if you breach the financial promotion prohibition?

A

You comitt a criminal offence

SQE - LEGAL SYSTEM & Admin Law (14 decks)

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