PERG 14.5 The ‘by-way-of-business’ test

Q38. How do I know if I am carrying on regulated activities by way of business?

Whether or not any particular person will meet the requirement that he carries on a regulated activity by way of business and so needs authorisation or exemption will invariably depend on that person’s individual circumstances. A number of factors need to be taken into account in determining whether the test is met. These include:

• the degree of continuity;
• the existence of a commercial element;
• the scale of the activity;
• the proportion which the activity bears to other activities carried on by the same person but which are not regulated; and
• the nature of the particular regulated activity that is carried on.

Corporate plan providers and those who provide professional services to them or to home occupiers are likely to be carrying on their activities by way of business. Unpaid individuals who act as trustees for home occupiers are not likely to be.

With home reversion plans, it is quite possible that the reversion provider may be an individual who is acting purely in the capacity of investor. Such a person may not be acting by way of business when the criteria listed above are applied to his particular circumstances.