Financial services Flashcards
What is the general prohibition in the Financial Services and Markets Act 2000?
No person may carry on a regulated activity in the UK unless authorised or exempt
When is a person classified as authorised?
When they have obtained authorisation from the appropriate regulator
What are the two financial regulators for the financial services industry?
The Prudential Regulation Authority and the Financial Conduct Authority
Which of the financial regulators regulates businesses, firms and financial advisors?
The Financial Conduct Authority
What is the FCA’s strategic objective and what are the operational objectives?
- to ensure that the relevant financial markets function effectively
- consumer protection objective
- integrity objective
- competition objective
What are regulated activities?
Activities that can only be carried on by persons with appropriate authorisation or by persons exempt from such authorisation - they have been ‘specified’ in an order made by the Treasury
What are the three components to a regulated activity?
- an activity of a specified kind
- relates to a specified investment
- carried on by way of business
What are some examples of specified activities?
- dealing in investments as agent
- arranging deals in investments
- managing investments
- advising on investments
- safeguarding and administering investments
What are examples of specified investments?
- Company stocks and shares
- Debentures, loan stock and bonds
- Government and public securities
- Insurance contracts
- Deposits
- Credit arrangements
What is not classed as specified investments?
- interests in land
- certain national savings products
What does ‘in the course of business’ mean?
A solicitor must carry out the relevant activity whilst acting as a solicitor for the client
Are there any exclusions?
- introducing an authorised person to a client
- arranging or dealing through an authorised third party
- acting as trustee or personal representative
- activities carried on in the course of a professional or non-investment business
- activities carried on in connection with the sale of a corporate body
What are exempt regulated activities?
Activities that may be carried on by persons exempt from FCA authorisation by virtue of the designated professional body exemption of the Financial Services and Markets Act 2000
The SRA, through the Law Society, is a DPB under the Act. What does this mean for firms authorised by the SRA?
They may carry on exempt regulated activities without being regulated by the FCA if they meet the conditions in s327
What are the statutory conditions under s327?
- a person is a member of a profession ie solicitor
- solicitors must disclose to the client any payment or other advantage they receive from a person for carrying on the regulated activity
- financial services must not represent a major part of the firm’s work. The activity must be incidental to the firm’s main work and the regulated activity must arise from or be connected to a legal service provided to a client
-the solicitor can only carry out the activities under the DPB exemption - the exemption cannot be used by firm that are authorised and regulated by the FCA
