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TC 2.1 Application: who? where? and what?

Who?

TC 2.1.1RRP
  1. (1)

    This chapter applies, subject to (2), to every firm to the extent indicated in TC 2.1.4 G, except that:

    1. (a)

      for an incoming EEA firm or an incoming Treaty firm, this chapter applies only in so far as responsibility for any matter it covers is not reserved by a European Community instrument to the firm's Home State regulator; and

    2. (b)

      this chapter applies to a UCITS qualifier only in so far as it is relevant to the manner in which a firm communicates or approves a financial promotion.

  2. (2)

    This chapter does not apply to an authorised professional firm with respect to its non-mainstream regulated activities, see PROF 5.2.

Where?

TC 2.1.2RRP
  1. (1)

    In relation to designated investment business:2

    1. (a)

      unless (aa) applies, 5this chapter applies to a UK domestic firm in respect of its employees who engage in or oversee activities (to the extent indicated in TC 2.1.4 G):2

      1. (i)

        from an establishment maintained by the firm (or its appointed representative) in the United Kingdom; and2

      2. (ii)

        with or for a client in the United Kingdom.2

    2. (aa)

      5if the designated investment business constitutes insurance mediation activity, this chapter applies to a UK domestic firm in respect of its employees who engage in or oversee activities (to the extent indicated in TC 2.1.4 G):

      1. (i)

        from an establishment maintained by the firm (or its appointed representative) in the United Kingdom; or

      2. (ii)

        from a branch established in another EEA State;

    3. (b)

      unless (bb) applies, this 5chapter applies to an overseas firm in respect of its employees who engage in or oversee activities (to the extent indicated in TC 2.1.4 G) from an establishment maintained by the firm (or its appointed representative) in the United Kingdom.125

      5
    4. (bb)

      5if the designated investment business constitutes insurance mediation activity, this chapter does not apply to an overseas firm which is an EEA firm.

  2. (2)

    In relation to regulated mortgage activities 2 carried on with for a customer, this chapter applies if the customer is resident in:2

    1. (a)

      the United Kingdom; or2

    2. (b)

      another EEA State, but in this case only if the activity is carried on from an establishment maintained by the firm or its appointed representative in the United Kingdom only;2

    at the time that the 2regulated mortgage activity is carried on.2

  3. (3)

    5In relation to insurance mediation activities in respect of non-investment insurance contracts carried on with or for a customer, this chapter applies to any such activity carried on by a UK domestic firm:

    1. (a)

      from an establishment maintained by the firm (or its appointed representative) in the United Kingdom; or

    2. (b)

      from a branch established in another EEA State.

TC 2.1.2AG

ECO 1.1.6 R has the effect that this chapter does not apply to an incoming ECA provider acting as such.

What?

TC 2.1.3GRP

The table in TC 2.1.4 G sets out the activities to which TC 2 applies.

TC 2.1.4GRP

Activities to which TC 2 applies.

43268267

Activity

Extent of Application

1. Employees engaging in:

Advising and dealing

(a) advising on investments which are, and dealing with or for clients in, securities (other than stakeholder pension schemes or broker funds) and derivatives;

(b) advising on investments which are, and dealing with or for clients in, securities (other than stakeholder pension schemes or broker funds) only;

(c) advising on investments which are, and dealing with or for clients in, derivatives only;

Managing

(d) managing investment;

(e) managing investments in relation to venture capital investments only;

Advising (without dealing)

(f) advising on investments which are packaged products (other than broker fund or as in (g), (h) or (ha));4

(g) advising on investments which are friendly society tax exempt policies only;

(h) advising on investments which are packaged products (where the employee sells only life policies issued by a friendly society and is not reasonably expected to receive remuneration of more than £1,000 a year in respect of such sales);

(ha) advising on investments which are long-term care insurance contracts;4

(i) advising on investments in the course of corporate finance business only;

(j) advising on investments which are (but not dealing in) securities (other than stakeholder pension schemes or broker funds) and derivatives;

(k) advising on investments which are (but not dealing in) securities (other than stakeholder pension schemes or broker funds) only;

(l) advising on investments which are (but not dealing in) derivatives only;

(m) the activity of a broker fund adviser;

(n) advising on syndicate participation at Lloyd's;

(o) the activity of a pension transfer specialist.

(p) advising a customer on a:3

(i) regulated mortgage contract (other than a regulated lifetime mortgage contract) or a regulated mortgage contract that is for a business purpose; and23

(ii) regulated lifetime mortgage contract.23

Non-advised sales

(q) designing scripted questions for use in sales to customers of regulated lifetime mortgage contracts which do not involve personal recommendations2;8

(r) advising on investments which are non-investment insurance contracts26

(s) providing basic advice on stakeholder products (other than a deposit-based stakeholder product).8

108

1. In relation to designated investment business:2

(a) if the activity is carried on with or for a private customer, whole of TC 2 applies;2

(b) if the activity is carried on with or for an intermediate customer or a market counterparty:9

(i) for a money market instrument activity, TC 2 is disapplied as a whole; or9

(ii) otherwise, only TC 2.4, TC 2.5, TC 2.6, and TC 2.8 apply.29

2. In relation to regulated mortgage activities2, whole of TC 2 applies.2

3. In relation to advising on investments which are non-investment insurance contracts if the activity is carried on with or for a retail customer (see ICOB), the whole of TC 2 applies, except for TC 2.5, as if in TC 2.2, TC 2.3, TC 2.4 and TC 2.7 each reference to private customer were a reference to retail customer.6

9

2. Employees overseeing on a day-to-day basis:

(a) operating, or acting as a trustee or depositary of, a collective investment scheme;

(b) safeguarding and administering investments or holding of client money (unless held in the course of carrying on a mortgage mediation activity2, or an insurance mediation activity only in relation to a non-investment insurance contract6);

(c) the following administrative functions in relation to managing investments:

(i) arranging settlement;

(ii) monitoring and processing corporate actions;

(iii) client account administration, liaison and reporting, including valuation and performance measurement;

(iv) ISA, PEP or CTF administration;7

(v) investment trust savings scheme administration;

(d) the following administrative functions in relation to the effecting or carrying out of life policies:

(i) new business administration;

(ii)policy alterations, including surrenders and policy loans;

(iii) preparingprojections;

(iv) processing claims, including pension payments;

(v) fund switching;

(e) taking private customers through decision trees in connection with a stakeholder pension scheme;

(f) the following administrative functions in relation to the operation of a stakeholder pension scheme:

(i) new business administration;

(ii) receipt of or alteration to contributions;

(iii) preparing projections and annual statements;

(iv) administration of transfers;

(v) handling claims, including pension payments;

(vi) fund allocation and switching.

(g) the sales to customers of 2regulated lifetime mortgage contracts which do not involve personal recommendations.2

Whole of TC 2applies exceptTC 2.7 (Supervising).

Actions for damages

TC 2.1.5RRP

A contravention of the rules in TC does not give rise to a right of action by a private person under section 150 of the Act (and each of those rules is specified under section 150(2) of the Act as a provision giving rise to no such right of action).