Unit 2: Financial Services Flashcards
s 19 FSMA 2000
‘No person may carry on a regulated activity in the UK unless authorised or exempt’
Would a real estate solicitor advising a client to get restrictive covenant indemnity insurance be conducting a regulated activity?
Yes
Two main restrictions on solicitors
(a) carrying out a regulated activity (general prohibition) or
(b) making a financial promotion (the financial promotions restriction)
Regulated Activity: Four Tests
a. Are you in business?
b. Is there a specified investment?
c. Is there a specified activity?
d. Does an exclusion apply?
Which exclusion applies to the activity of ‘arranging’
Introducing: Solicitor introduces client to authorised person and then has no further role
(does not apply to insurance contract)
What would happen if a solicitor carried out a regulated activity without authorisation
Criminal offence
- penalty of up to two years’ imprisonment or an unlimited fine
- could make any resulting agreements unenforceable
Which investments are not relevant for ‘specified investments’
a. Interests in Land
b. Certain national savings products
s 21 FSMA 2000
An unauthorised person cannot engage in a financial promotion
Consequences of a solicitor carrying out unauthorised financial promotion (or any individual)
Criminal Offence
DEF: Regulated Activities
A regulated activity is defined as an activity of a specified kind that is carried on by way of business and related to a specified investment or property of any kind
Examples of specified activities in relation to specified investments
- dealing as agent
- arranging
- managing
- safeguarding
- advising
- lending money on / administering a regulated mortgage contract
- establishing, operating or winding up a collective investment scheme or personal pension scheme
Exclusions for regulated activities
- Introducing
- using an authorised third party
- acting for an execution-only client
- acting as Trustee or PR
- the professional / necessary exclusion
- the takeover exclusion
When does the takeover exclusion not apply
Arranging
Advising
or dealing as an agent in respect of buying or selling insurance contracts
When does the takeover exclusion apply
Arranging
Advising
dealing as agent