PERG 8.24 Advising on investments

4The definition of the regulated activity of advising on investments (except P2P agreements) differs depending on the person giving the advice.

Under article 53(1)1 of the Regulated Activities Order, for anyone except a person in PERG 8.24.1AG,4 advising on investments (except P2P agreements)1 covers advice which:

1. (1)

   is given to a person in his capacity as an investor or potential investor, or in his capacity as agent for an investor or a potential investor; and

2. (2)

   is advice on the merits of his (whether as principal or agent):4

   2
   1. (a)

      4buying, selling, subscribing for, exchanging, redeeming, holding4 or underwriting a particular investment which is a security, a4 structured deposit or a relevant investment; or

   2. (b)

      4exercising or not exercising4 any right conferred by such an investment to buy, sell, subscribe for, exchange or redeem4 such an investment.

1. (1)

   4However if a person is authorised for the purposes of the Act to carry on any regulated activity other than (or in addition to):

   1. (a)

      advising on investments (except P2P agreements); or

   2. (b)

      the regulated activity of agreeing to carry on a regulated activity in relation to (a);

   that person only advises on investments (except P2P agreements) if it is providing a personal recommendation.

2. (2)

   A person described in (1) is referred to in the Regulated Activities Order as appropriately authorised.

3. (3)

   PERG 8.30B describes personal recommendations.

4. (4)

   The result is that for a person in (1), the definition of the regulated activity of advising on investments (except P2P agreements) only covers a subset of the advisory activities that apply to other persons giving advice.

5. (5)

   In the FCA’s view a person is only appropriately authorised for the purposes of (1) if it is a firm whose permission includes regulated activities other than (or in addition to) the ones listed in (1)(a) and (b).

1. (1)

   4A firm that is not appropriately authorised (see PERG 8.24.1AG for what this means) will need permission for advising on investments (except P2P agreements) whether it wants:

   1. (a)

      to give non-personalised advice (see (4)); or

   2. (b)

      to give any other kind of advice coming within the regulated activity of advising on investments (except P2P agreements).

2. (2)

   If a firm in (1) only wants to give non-personalised advice, it may apply for an appropriate limitation.

3. (3)

   For a firm that is appropriately authorised:

   1. (a)

      it may give non-personalised advice without the need to have advising on investments (except P2P agreements) in its permission;

   2. (b)

      giving non-personalised advice will (for it) be an unregulated activity; and

   3. (c)

      if it wishes to provide personal recommendations, its permission should include advising on investments (except P2P agreements).

4. (4)

   In this paragraph non-personalised advice means advice that:

   1. (a)

      is covered by PERG 8.24.1G; but

   2. (b)

      is not a personal recommendation.

1. (1)

   4PERG 8.30B (Personal recommendations) is only relevant to a firm that is appropriately authorised.

2. (2)

   The rest of the material in this chapter about advising on investments (except P2P agreements) is still relevant to a firm that is appropriately authorised because, as explained in PERG 8.30B.6G, that material is also relevant to the definition of personal recommendation.

3. (3)

   See PERG 8.24.1AG for what appropriately authorised means.

4For:

1. (1)
   1. (a)

      a firm that is not appropriately authorised (see PERG 8.24.1AG for what appropriately authorised means); and

   2. (b)

      an unauthorised person;

   all the material in this chapter about advising on investments (except P2P agreements) is relevant, except for PERG 8.30B (Personal recommendations).

2. (2)

   The definition of advising on investments (except P2P agreements) that applies to a person in (1) is the one in PERG 8.24.1G. It is not relevant to such a person whether or not the advice is a personal recommendation.

For advice to be covered by4 PERG 8.24.1 G:4

1. (1)

   it must relate to an investment which is a security, structured deposit2 or a relevant investment;

2. (2)

   that investment must be a particular investment;

3. (3)

   it must be given to persons in their capacity as investors or potential investors;

4. (4)

   it must be advice (that is, not just information); and

5. (5)

   it must relate to the merits of investors or potential investors (or their agents) buying, selling, subscribing for or underwriting (or exercising rights to acquire, dispose of or underwrite) the investment.

1. (1)

   4Each of the requirements4 referred to in PERG 8.24.2G is considered in greater detail in PERG 8.25 to PERG 8.29.

2. (2)

   4PERG 8.30 and PERG 8.30A have further material about the definition of advising on investments (except P2P agreements) found in PERG 8.24.1G.

3. (3)

   4PERG 8.30B explains what a personal recommendation is.

4PERG 8.24 to PERG 8.30B only cover advising on investments (except P2P agreements). They do not cover the following regulated activities, which also cover giving advice:

1. (1)

   providing basic advice on a stakeholder product under article 52A of the Regulated Activities Order;

2. (2)

   advising on P2P agreements;

3. (3)

   advising on regulated mortgage contracts;

4. (4)

   advising on a home reversion plan;

5. (5)

   advising on a home purchase plan;

6. (6)

   advising on a regulated sale and rent back agreement;

7. (7)

   advising on regulated credit agreements for the acquisition of land;

8. (8)

   advising on conversion or transfer of pension benefits;

9. (9)

   advising on syndicate participation at Lloyd’s; or

10. (10)

    debt counselling.

4PERG 5.8 (The regulated activities: advising on contracts of insurance) explains how the material in PERG 8.24 to PERG 8.30A applies in the specific context of contracts of insurance.