Unit 1 - Extra Flashcards
Firm XYZ is an authorised person in the UK and communicates a promotion from Firm JKL, an authorised overseas person.
The extent to which the compensation will or will not be available must be stated
Where a firm communicates or approves a financial promotion on behalf of an overseas person, the financial promotion must make clear which firm has communicated or approved it and (where relevant) must explain:
That the rules for the protection of investors will not apply
The extent to which the UK compensation scheme arrangements will be available (and if they will not, that fact), and
If the communicator wishes to do so, the details of any overseas compensation and/or the deposit protection scheme applicable.
The firm must not communicate and/or approve the promotion unless it has no doubt that the overseas firm will deal with its UK clients honestly and reliably.
A firm is able to execute a client order on venue A or venue B. If the spread associated with venue A is better, the firm must execute on
Either venue A or venue B provided the cost difference only reflects actual execution cost differences
Explanation
Different prices can only be charged for different venues if the difference reflects the actual execution cost differentials and not, for example, commissions received by the executing broker. The increased execution costs may reflect a better service.
Which one of the following conduct rules applies to all persons captured by the SM&CR regime? You must:
The correct answer is: D - Observe proper standards of market conduct
Explanation
The individual conduct rules that apply to ALL SM&CR individuals are:
• You must act with integrity
• You must act with due skill, care and diligence
• You must be open and cooperative with the FCA and PRA and other regulators
• You must pay due regard to the interests of customers and treat them fairly
• You must observe proper standards of market conduct
When considering the rule on product information to be disclosed before providing services, to whom would the firm need to make these disclosures?
The correct answer is: A - Retail clients only
Explanation
The product disclosure rules (i.e. KIDs) would only apply to retail clients.
Which one of these is not a per se eligible counterparty
The correct answer is: C - Local authority
Explanation
Local authorities are retail clients, and can never be treated as eligible counterparties.
The Tax and Chancery Chamber of the Upper Tribunal is operated by
The correct answer is: D - A government department
Explanation
The Tribunal as an appeal committee is independent of the Regulator. It is run by the Ministry of Justice.
Under the regime created by the retail distribution review, which of the following is TRUE?
The charge can be ongoing and based on a percentage of the funds invested
Explanation
Advisers must move to fee-based charging. This can be an upfront fee or an ongoing fee based on a percentage of the funds invested (as long as an on going service is provided). Fees should be itemised and disclosed up front, but this should be based on the service provided not the product.
The FCA guidance on electronic communication with a client states that a firm should do all of the following, except
A
Be able to demonstrate that the client wishes to communicate using this type of media
B
If entering an agreement, make it clear to the client that a contractual relationship has legal consequences
C
Have in place arrangements to ensure secure transmission and receipt of the communication
Except:
D
Be able to demonstrate that it made it clear to the client that instructions communicated in this manner may not be acted upon immediately
Explanation
The firm should also be able to verify the authenticity and integrity of the communication, together with the date and time sent and received.
Which of the following best represents the FCA view on industry guidance
The FCA will not monitor or enforce compliance
Explanation
It is not mandatory and the FCA will not enforce or compel other bodies to enforce the guidance.
Which of the following statements complies with the inducements rules?
An acceptable commission is one that has been paid to a client
Explanation
In relation to designated investment business or, in the case of MiFID business, another ancillary service, a firm must not pay to, or accept from, a person other than the client any fee or commission (or provide or receive any non-monetary benefit).
When a firm provides designated investment business to a retail client, the training and competency requirements do not apply for which of the following?
Arranging
Explanation
The rules apply for advising, dealing, managing and overseeing on a daily basis.
Which of the following is not true regarding the Financial Services Compensation Scheme?
Eligible counterparties may never make a claim on the scheme
Explanation
Retail clients may claim on the scheme in respect of all losses (subject to a maximum claim).
Professional clients can claim in respect of long-term insurance and compulsory insurance (e.g. employers liability insurance). Partnerships, but not other professional clients, may also claim in respect of deposits.
Eligible counterparties may also claim in respect of long-term and compulsory insurance only.
For which one of these financial instruments is a firm required to assess appropriateness when performing execution only services?
Securitised debt embedding a derivative
Explanation
The other instruments are considered to be simpler financial instruments and therefore the appropriateness test is not required.
Under which of the following circumstances do the conduct of business rules not require a firm to enter into a client agreement
The client enters into an insurance contract with the firm as principal
Explanation
The COBS are explicit in saying that MiFID business requires a client agreement for all customers, unless the firm acts as principal with an insurance contract.
Which one of the following is NOT regarded by the FCA as a reasonable inducement to be paid by a product provider to a firm in relation to the sale of packaged products?
Office rent
Explanation
The inducement must be for the client and it must not be something that the firm would normally expect to pay, such as office rent. ‘Minor non-monetary benefits’, such as tea and coffee and biscuits at a meeting, are also allowed.
Where a firm becomes aware of a conflict of interest that may damage a particular client’s interests, which of the following procedures must the firm follow?
Manage the conflict and continue to deal
Explanation
Where a firm identifies a conflict of interest they must manage it. Only if they are unable to manage the conflict are they required to disclose it.
To be marketed in an EEA country a UK unit trust must
Conform with UCITS directive and member state’s regulations
Explanation
If a UK regulated CIS conforms with UCITS directive and member state’s regulations, then it can apply for a UCITS passport from the FCA and market itself across the EEA
Which of the following does NOT require a key information document
Cash deposit individual savings account
Explanation
Under PRIIPs, investment funds, insurance-based investment products, retail structured securities and structured term deposits all require KIDs
Which of the following is TRUE in respect of the conflicts of interest policy?
Where a firm is part of a group, the policy should take account any potential conflicts arising from that group
Explanation
This is a tricky question.
The rules protect ALL types of client.
A description of the policy should be provided to retail clients and potential retail clients.
The policy itself does not require firms to maintain effective and administrative arrangements, but shows how they will identify and manage conflicts.
Which of the following best describes the cancellation period offered to a client of the firm?
Compulsory for certain products
Explanation
Reflection periods of 14 or 30 days have to be offered when the firm sells packaged products or cash deposit ISAs.
According to the inducement provisions stated by the FCA, which of the following is not an appropriate payment by the firm
A third party providing general office equipment used for word processing and accountancy in the normal running of the firm’s activities
Explanation
General office equipment is specifically prohibited by FCA regulations.
Since office equipment, the firm would normally expect to pay, hence it’s an inducement to receive it
For what time period would a firm keep records on confirmation of trades for MiFID business?
Five years from dispatch
Explanation
A firm must retain a copy of any confirmation dispatched to a client for the following periods from the date of dispatch:
- Five years - MiFID business
- Three years - non-MiFID business
When the holdings of a married couple are automatically aggregated as a result of deciding if one of the sizable holdings rules have been broken, this is known as working as:
Connected parties
Explanation
Connected parties are automatically joined because of their relationship. Connected parties include spouses, children that are minors and family-owned businesses.
Which ONE of the following investments is NOT permitted under the Markets in Financial Instruments Directive?
Mortgages
Explanation
MiFID does not cover mortgages.
A defence against a charge of carrying out a regulated activity without authorisation could be:
Managing own portfolio
Explanation
Dealing for yourself where no service is offered to others is an excluded activity
For the purpose of the best execution rule, which one of the following is not an acceptable execution venue?
Any over the counter arrangement
Explanation
Execution venues must be outlined in the firm’s execution policy. Although some OTC markets are acceptable venues, it would not be an automatic choice and the firm would need to justify the choice. Of the four answers available, OTC is the best choice
When a firm is carrying out which type of business is the FCA’s Conduct of Business Rule relating to suitability required?
Advisory MiFID services on behalf of retail and professional clients
Explanation
Suitability is required to be assessed for discretionary and advisory business. For MiFID services, this rule covers all customers. For non-MiFID designated investment business, the rule only covers retail clients.
Who performs the regulatory check of a mail-shot sent by an appointed representative?
The compliance department of the appointing firm
Explanation
The general non-real time financial promotion rules require each promotion to be signed off by compliance or another employee with sufficient knowledge to do so
What do insider dealing and market abuse have in common?
They can both involve the use of non public information
Explanation
Market abuse is dealt with by the Market Abuse Regulation. Market abuse does not require the person to have intended to abuse the market. Insider dealing is a criminal offence, however market abuse is a civil offence.
Which of the following best describes the relationship between the FCA, the PRA and the board of the Financial Services Compensation Scheme (FSCS)?
The Chairman of the board of the FSCS is appointed by the FCA
Explanation
The FSCS is operationally independent of the Regulator, although it must account directly to the Regulator for its actions.
In relation to data protection, to whom does a firm’s Data Input Officer report?
The firm’s Data Controller
Explanation
The data input officer within a firm will report to the firm’s data controller
The FCA intend to take action against a firm for a breach of a rule. Which of the following will inform the firm of the action proposed?
Warning notice
Explanation
The warning notice gives the recipient details about the action proposed and why the FCA proposes to do so.
Which of the following is the correct interaction between the FCA regulations on money laundering and the JMLSG guidelines?
Firms cannot usually be disciplined for not following the regulations if they follow the JMLSG guidelines
Explanation
The JMLSG guidelines provide an indication of what is expected of financial sector firms and, when tailored by a firm to its own risk base and business profile. They provide a safe harbour in respect of the regulations.
Which of the following functions in an authorised firm is LEAST likely to require approval under the individual accountability regime?
Customer advisor on investments
Explanation
A role advising customers is the best answer here, as it is the most likely to require certification, not approval.
The MLRO must report to senior management at least every:
12 months
The MLRO must report to senior management at least once every calendar year.
Which of the following instruments is NOT within the scope of the Criminal Justice Act 1993 (Insider Dealing)?
Building Society share account
Explanation
A building society share account would not be covered as it has no secondary market
An authorised firm, acting on behalf of a client, has received an order to buy 5,000 shares in XYZ plc just before the market opens. The firm believes that the market will open with a sharp fall due to significant losses on the S&P 500 overnight. When should the firm execute the transaction?
The firm may delay execution if it believes it is in the best interests of the client
Explanation
The rule states that a transaction should be executed as soon as is reasonably practicable. Transactions may be delayed if the firm has taken reasonable steps to ensure that the deal will not operate to the client’s disadvantage.
Which of the following is not an appropriate action for avoidance of a conflict of interest?
Implementing Chinese walls in place of a personal account notice
Explanation
Personal account notices cannot be substituted with Chinese walls. The personal account dealing rules are mandatory.
When the Regulations Decision Committee issues a final notice to a firm at the end of the investigation procedure, which of the following is not included on a final notice
The disciplinary action taken by the firm
Explanation
A final decision notice is issued by the RDC and will not include information on any disciplinary action the firm has taken against its employees
The main objective of the ‘Persons Discharging Managerial Responsibility’ (PDMR) regime is:
To ensure the LSE is perceived to be a fair and orderly market
Explanation
The ‘Persons Discharging Managerial Responsibility’ (PDMR) regime does not prevent directors’ dealings, although it does attempt to restrict dealings during the closed periods (when there is a greater risk of insider dealing).
A retail client approaches a financial advisor (FA) to gain advice on a pension product. Which of the following must be disclosed regarding the scope and range of the advice by the FA before doing business?
Scope and range of advice in a durable medium
Explanation
The scope and range of advice needs to be disclosed by all financial advisors, unless they are giving advice on stakeholder products. The disclosure must be made in a durable medium.
When a firm uses a website to promote a product and gives the facility for an online application this would be considered to be?
Direct non real-time offer
Explanation
Website promotions are deemed to be non-real time financial promotions.
Which of the following represents an acceptable inducement under COBS
Management fees
Explanation
Allowable services are those that would be directly relevant to customers
In relation to rules governing regulated and unregulated activities, Part 9A of the Financial Services and Markets Act 2000 empowers the FCA to do which one of the following
Create rules that are legally binding on authorised firms concerning regulated activity and also activity that is not regulated
Explanation
Part 9A of the FSMA empowers the FCA to make rules that are legally binding on authorised firms concerning regulated activity and also activity that is not regulated.
According to guidance in the FCA handbook which of the following would BEST indicate that an investment manager of a client portfolio was engaged in churning
Excessive activity in a client’s portfolio containing shares
Explanation
Persons acting in collusion that secure a dominant position over the supply of or demand for an investment. A sale or purchase of an investment where there is no change in beneficial interest or market risk. Both are market abuse.
Excessive activity in a client’s portfolio containing packaged products is switching
A firm has received a sell limit order from a professional client. The order is the tenth order received from that client over a period of three months. The order cannot be executed immediately through the firm.
Which of the following reasons would justify the firm not making the order public on the LSE
The client has instructed otherwise
Explanation
Limit orders from all customers, not executed immediately, must be made public.
The only exceptions to this requirement is if the client instructs otherwise, or if the order volume is greater than normal market size.
Which ONE of the following is LEAST LIKELY to be a professional client
Unauthorised firm
Explanation
The Bank of England, IMF and pension providers are all examples of ‘per se’ professional clients. An unauthorised firm could be either a professional firm or retail client and therefore is the best answer.
Although a client provides a firm with specific instructions, the firm executes the trade in accordance with their own trade execution policy. What must the firm do?
Report itself to the FCA, as it is potentially in breach of regulations
Explanation
If a client gives specific instruction, the firm is obliged to act on them, and in doing so is deemed to have achieved ‘best execution’
In relation to an authorised firm placing reliance on others for information, which of the following is not a qualifying criteria?
The information provider must be based in the UK
Explanation
There is no requirement for the information provider to be based in the UK.
The COBS relating to financial promotions require an individual with appropriate expertise to check that the promotion is fair, clear and not misleading. For which of the following types of financial promotion is such a confirmation exercise required before issue
Non real-time financial promotions
Explanation
The general requirement for such a check is a requirement for non-real time financial promotions only.
Which of these is an eligible claimant under the FSCS
A shareholder who owns < 5% of an organisation
Explanation
Eligible claimants are certain persons who have a protected claim against an authorised person who is in default. This includes most clients of the defaulting firm, except:
- Other authorised firms
- Overseas financial institutions
- Supranational institutions, governments and central administrative authorities
- Provincial, regional, local and municipal authorities; and
- Large companies or large mutual associations
In relation to providing investments, the rule on inducements in the Conduct of Business rules, which ONE of the following is TRUE?
The rules allow the firm to pay an inducement to the client
Explanation
The rule ““A firm must not pay to, or accept from, a person other than the client, any fee, commission or non-monetary benefit”” allows payment to, and from, the client.
The inducement rules apply to all customers, i.e. professional clients and retail clients.
Disclosure of the inducement must be made to the client before providing the service. The prohibition does not apply to ‘minor non-monetary benefits’.
Under FCA regulations, which of the following is true of a written financial promotion?
A firm can arrange for a third party to carry out the confirmation exercise and the responsibility for the promotion remains with the firm
Explanation
Notice that there is a difference between confirmation and approval. Approval would lead to the approving firm taking on the responsibility. Confirmation, effectively proof reading, would leave the responsibility with the original firm.
Which of the following gives the FCA the power to prosecute insider dealing offences?
Financial Services and Markets Act 2000
Explanation
The offence is contained within the CJA 1993, however the ability of the FCA to prosecute comes from FSMA 2000.
When a firm communicates initially with a retail client, COBS requires it to provide ‘appropriate information’, which includes all of the following except
Who to refer complaints to if they cannot be resolved by the firm
Explanation
Reference to any complaints resolution body is not necessary
Which of the following would not be exempt from requiring authorisation
Lloyd’s of London
Explanation
It is a member of Lloyd’s that would be exempt
How is the Pension Protection Fund (PPF) funded?
They take on assets from schemes tranferred to the PPF
Explanation
The PPF will:
• Charge a levy on all eligible pension schemes (not all schemes)
• Take on the assets of schemes that transfer to the PPF
• Recover money, and other assets, from the insolvent employers of the schemes (not members of the scheme), and
• Invest all income and assets.
The aim is to make sure they can pay members’ compensation for as long as they are entitled to it.
HM Treasury does not contribute to this fund.
A fund manager sends out a mailshot blindly to several clients. The email contains information regarding the manager’s products and his website. Which of the following is covered under the Distance Marketing Directive
The email and the website
Explanation
Since the email promotes the website, both would be covered under the directive.
In which of the following circumstances would it be permissible to not give a client a client agreement?
Retail clients paying for advice only with no resultant deals
Explanation
Client agreements need to be sent out to all clients; that is retail clients for all designated investment business and professional clients for MiFID business only. Although client agreements would need to be sent to clients receiving advisory services (these assume deals are performed based on that advice), they would not be needed for advice only, where no resultant deals occur.
According to the conduct of business rules and in relation to MiFID business, a firm must have in place a client agreement when it carries on:
Designated investment business for a retail client and MiFID business for a professional client
Explanation
Designated Investment Business is made up of MiFID and non-MiFID business. In respect of MiFID business, both retail and professional are protected. RC get protected for all designated investment business.
NOTE: whilst designated investment business includes MiFID and non-MiFID business NOT all non-MiFID business is designated investment business. For example, bank deposits and pure protection insurance is not designated investment business
A per se professional client asks an authorised firm for it to be categorised as a retail client for extra protection for MiFID business. Which is TRUE about the firm’s response
The firm would enter into a written agreement regarding re-categorisation
Explanation
Risk warnings would be signed if the client were opting-up. All clients are permitted to ask for extra protection by being re-categorised. This re-categorisation can be, generally, regarding specific services or regarding specific investments.
When the FCA grants an exchange with recognised status, it:
Requires that the exchange must be fit and proper
Explanation
In order to be recognised by the FCA, these exchanges and clearing houses need to be fit and proper for their purpose. Once recognised, the exchanges are referred to as recognised investment exchanges (RIEs), and the clearing houses are referred to as recognised clearing houses (RCHs). RIEs and RCHs are exempt persons in that they do not need to seek authorisation from the FCA to carry out regulated activities – they are, instead, recognised.
When confirming whether a financial promotion complies with the financial promotions regulations, which of the following is TRUE?
Confirmation of compliance must be made by a person with appropriate expertise
Explanation
The person checking the promotion must have appropriate expertise.
If a firm is not authorised, they must get the promotion checked by an authorised firm
The directors of a UK financial institution use an overseas agent who, it has been proved, has accepted and used bribes in their activities. Which of the following would be a valid defence against any of the four offences of the Bribery Act 2010?
The directors could prove that adequate procedures are in place to prevent bribery
Explanation
Full defence may be possible if there is proof of adequate procedures being in place to prevent bribery and these can be clearly demonstrated.
When a firm trades with an eligible counterparty, which one of the following rules does not apply?
Selling and advising
Explanation
COBS have a limited application to eligible counterparties and the advising and selling regulations do not apply.
After the initial investigation by the FCA officers, the information is typically handed over to the Regulatory Decisions Committee who would decide what action is necessary. Any proposed action would be stated in a warning or supervisory notice. Which of the following could be issued by the RDC instead of these notices?
Notice of discontinuance
Explanation
A notice of discontinuance will be issued when the RDC decides that no further action is required
When an appointed representative is communicating a promotion to retail clients, and making appointments, which of the following is not required?
The detailed risks of the investment
Explanation
The detailed risks of the investment can be discussed at a later date.
Fixed vs flexible portfolio firms
Supervisory model
tools of supervision
fixed portfolio = large firm subject to proactive supervision
flexible portfolio = all other firms
Model
- proactive
- reactive
- thematic
Tools
- diagnostic
- monitoring
- remedial
- preventative
PRA fundamental principles
- integrity
- skill, care and diligence
- prudence
- adequate financial resources
- effective risk management
- organization and control
- relationship with regulators
- resolution procedures
Specified investments under RAO
and specified activities
shares/warrants debt instruments units in CISs options on (specified investments, currencies, precious metals) (not other commodities) futures (All futures, any commodities) pensions regulated mortgages
Excluded investments
- property
- tangible assets (oil, metals, etc)
- currencies (spot and forwards)
- premium bonds
Activities
- dealing
- arranging
- managing
- advising
Excluded activities
- newspaper advising (not tipsheets tho)
- unpaid trustees (nominees and executors)
- employee share scheme
- dealing as principal (on own account)
individual conduct rules (5)
Senior manager conduct rules (4)
- act with integrity
- due skill, care and diligence
- open and cooperative with regulators
- treat customers fairly
- proper standards of market conduct
SM
- take steps to ensure business is controlled effectively
- firm complies with relevant regulatory requirements
- delegation of responsibility
- disclose info to regulators which they would reasonably expect notice
CISI code of conduct
- personal accountability
- client focus
- conflict of interest
- respect for market partners
- professional development
- aware of capabilities
- respect others and the environment
- speak up and listen up
Don’t forget stakeholders, add section which states who is impacted by each statement.
Explain the regulators enforcement process
Initial investigation
—>
Preliminary findings
—> (private warning or action)
RDC steps in
- warning notice
- supervisory notice
- notice of discontinuance
firms response
- decision notice
- supervisory notice
- notice of discontinuance
appeal to Upper Tribunal within 28 days
- final decision
- final supervisory
- notice of discontinuance
--------------------------------- warning = intention for discipline supervisory = for support decision = taking action final = doing on certain day
statutory
- warning notice
- decision notice
- supervisory notice
STOR
Suspicious transaction and order reports
Firms should not second guess what is suspicious
PDMR
Persons discharging managerial responsibilities
MAR PDMR regime = Disclosure transactions in own shares of company to the firm and FCA within 3 business days from transaction.
Close period 30 days before announcement
stakebuilding disclosure rules
EU 4 business days
UK 2 business days
MiFID core activities and ancillary services
Core
- reception/transmission of orders
- execution of orders
- portfolio management
- investment advice
- underwriting and placing
- operating MTF or OTF
Ancillary services
- safekeeping and administration
- loans to carry out transactions
- investment research and financial analysis
MiFID instruments and exclusions
- shares/debt
- units in CIS
- money market
- derivatives on securities, currencies, interest rates or yields
- commodity derivatives (cash or psychical settled)
- etc
Exclusions
- bank accounts
- FX
- physically settled derivatives if for commercial use
- commodity spot trading
- all mortgages
EU COBS home/host rules
Typically follow home state COBS unless branch and client are host state, then follow the host state COBS rules.
COBS and designated investment business
COBS apply directly to firms conducting designated investment business or insurance business from an establishment in the UK.
Designated investment business =
- dealing
- arranging
- advising
- managing
in all MiFID instruments and some non-MiFID instruments such as packaged products which are retail investment products.
COBS/CASS which rules relate to which clients
All clients (EC, PC, RC)
- client categorisation
- most information disclosure rules
- conflict of interest rules
- occasional and periodic reporting rules
- client assets
Retail client only rules
- financial promotions rules
- retail investment product disclosures (KFD, KIID, KID)
- sending suitability report to client
All other rules apply to retail and professional clients
Quantitative tests for client categorisation
BS/turnover/own funds
per se PC
20/40/2
in relation to non-mifid business
per se PC
12.5/25/250employ
Elective pro
average trade freq of 10 per Q over last 4 Q’s
portfolio > 500k euro
worked 1 or more in fin sector
Distance marketing directive
Applies when there is no face-to-face contact between the client and the firm
When a distance contract is concluded the client is given:
- minimum specified information about a financial product
- a right to cancel
Packaged products vs retail investment products
packaged products
- life policy
- regulated CIS
- investment trust savings scheme
- stakeholder pension
- personal pension
retail investment products
- packaged products plus
- share in investment trust
- structured capital at risk products
Eligible complainants
- consumer (individual acting in private manner)
- business with fewer than 10 emply and turnover of less than 2m
- charities with annual income less than £6.5m
- trusts with net assets less than £5m
- certain SMEs with annual turnover less than £6.5m and balance sheet threshold of £5m, or fewer than 50 employees
Can a third party appeal to the Tribunal on behalf of an authorised firm against a decision notice?
Yes, if the appeal is made within 28 days of the notice being issued
Explanation
A person who receives a decision notice or supervisory notice (including a third party who has been given a copy of a decision notice) has the right to refer the Regulator’s decision to the Tax and Chancery Chamber of the Upper Tribunal (formerly known as the FSMT).
The Collective Investment Scheme Sourcebook does not apply to which of the following?
The correct answer is: C - Director of an investment trust
Explanation
Investment trust companies are not classified as a CIS and therefore are not covered by the CIS Sourcebook.
Market abuse is different from the offence of insider dealing in all of the following ways except:
It should be easier for the FCA to impose a custodial sentence
Explanation
The burden of proof is less difficult to establish than beyond a reasonable doubt and hence it should be easier to demonstrate abusive behaviour. However, only fines can be imposed. Market abuse is applicable across the board.
To which one of the following activities do the conduct of business rules apply?
Long-term insurance business in relation to life policies
Explanation
The conduct of business rules also apply to designated investment business.
If an authorised firm is conducting unauthorised regulated activities, this will be considered to be which ONE of the following?
A criminal matter
Explanation
This is a tricky question as, strictly, unauthorised regulatory activity can be dealt with in both the criminal and civil courts. However FSMA makes the breach of the general prohibition a criminal offence; therefore the criminal offence is the best answer.
