Financial Services Flashcards
What is the FCA?
The financial conduct authority
Secures an appropriate degree of protection for consumers, enhancing integrity of UK financial systems
What is the PRA?
Prudential regulations authority
Subsidiary of the Bank of England, responsible for authorisation regualtion and supervision of firms that manage financial risks (banks)
What is the general framework for authorisation and solicitors firms?
Regulated activiites. They need to be authorised by the appropriate regulator. The FCA is the appropriate one for the solicitor forms.
What special provisions is included in FSMA 2000?
Professional firms that do not carry out mainstream investment businesses, but may carry out regulated activities, are EXEMPT from having to obtain permission from FCA, can come from SRA
What 2 restrictions are present for a solicitors firm?
General prohibition - carrying out regulated activity
Financial promotion prohibition: making a finanalc promotion
What is the general prohibition?
No person may carry on regulated activity unless authorised or exempt
Authorised are persons with permission granted by appropriate regulators
What is financial promotion restriction?
An unauthorised person cannot engage in a financial promotion. It is a criminal offence
What is a regulated activity?
Defined as an activity of a specified kind that is carried on by way of business and relates to a specified investment or property of any kind
What are the 4 tests to work out if an activity is regulated?
Are you in business?
Is there a specified investment, or does the activity relate to information about a persons financial standing?
Is there a specified activity?
Is there an exclusion?
What are the specified investments?
Company stocks and shares
Debentures, loans stocks and bonds
Government securities, gilts
OEICs, like unit trusts
Insurance contracts
Regulated mortgage contracts
Home reversion adn home purchase plans
Deposits
Credit agreements
What are the 6 specified investment activities?
Dealing as an agent
Arranging
Managing
Safeguarding
Advising
Lending money/administering
How could you deal as an agent in a specified investment?
Buying, selling or underwriting investments
How could you arrange a specified investment?
Contact between client and life company
How could you manage a specified investment?
By active participation in the holding of investments
How could you advise in a specified investment?
Advice to a person in their capacity as an investor, on the merits of buying and selling specific shares
Note : generic advice is ok
What are the 6 exclusions?
Introducing
Authorised third party
Execution-only client exclusion
Professional/necessary exclusion
Takeover exclusion
What are the exclusions for specified investment activities?
An act which otherwise would be a regulated activity is no longer as such.
Solicitors does NOT need ot be authorised
How is introducing an exclusion for specified investments?
This applies to the areas of arranging.
If you introduce the client to an authorised person, and then have no further role int eh clietns matter, this is allowed
How is ATP an exclusion for specified investments?
Authorised third party
This exclusion applies where a transaction is to be entered into based on a dice of an ATP
How is execution-only client exclusion an exclusion for specified investments?
Advice has not been sought from the solicitor
How is professioanl exclusion an exclusion for specified investments?
If an activity is performed in the course of carrying on a professional business, and may reasonably be regarded as a necesary party of other service provided in the course of that busienss, then you are allowed
How is takeover exclusion an exclusion for specified investments?
Oaky to a transaction to acquire or dispose of shares in a body corporate, or for a transaction entered into for the purpose of such acquisitions.
Which exclusions are application for dealing as an agent?
ATP
Execution nly
Professional exclusion
Taxover exclusion
Which exclusions are application for arranging?
Introducing
ATP
Execution only
Professional
Acting as trustee
Takeover
Which exclusions are application for advising
Professional
Acting as trustee
Takeover
Which exclusions are application for managing
Acting as trustee
Which exclusions are application for safeguarding
Professional
Acting as trustee
What is the s 327 exemption?
Exemption for professional firms
What is the exemption for professional firms?
Professiaonl firms are able to carry out certain regulated activities, provided certain conditions are met.
This is an exemption from aiding to obtain authority from FCA where the firm is regulated and supervised by Designated Professioanl Body - SRA
What are the COB rules ?
SRA Financial Services (Code of Business) Rules
What do the COB rules regulate?
They regulate the way in which a firm may undertake fianncial services under the professional exemption.
They apply ONLY when the firm is carrying out an exempt regulated activity
What are the 5 main rules of COB?
Firm use provide client with certain information on the status of the firm
Solicitor must act in best interest for client
Firm must keep record of instructions from client to carry out transactions
Firms must keep records of commissions recieved
Where a firm acts for execution-only, it must send a letter confirming that the client is NOT relying on advice from solicitor.
