Related provisions for PERG 4.6.3

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To access the FCA Handbook Archive choose a date between 1 January 2001 and 31 December 2004 (From field only).

PERG 4.6.1GRP
Article 53A of the Regulated Activities Order (Advising on regulated mortgage contracts) makes advising on regulated mortgage contracts a regulated activity. This covers advice which is both:(1) given to a person in his capacity as borrower or potential borrower; and(2) advice on the merits of the borrower:(a) entering into a particular regulated mortgage contract (whether or not the entering into is done by way of business); or(b) varying the terms of a regulated mortgage contract
PERG 4.6.5GRP
Advice will come within the regulated activity in article 53A of the Regulated Activities Order only if it relates to a particular regulated mortgage contract (or several different regulated mortgage contracts). The question is whether a recommendation is made to a customer which either explicitly or implicitly steers the customer to a particular regulated mortgage contract because of its features.
PERG 4.6.7GRP

Typical recommendations and whether they will be regulated as advice under article 53A of the Regulated Activities Order

This table belongs to PERG 4.6.5 G and PERG 4.6.6 G.

Recommendation

Regulated or not?

I recommend you take out the ABC Building Society 2 year fixed rate mortgage at 5%.

Yes. This is advice which steers the borrower in the direction of a particular mortgage which the borrower could enter into.

I recommend you do not take out the ABC Building Society 2 year fixed rate mortgage at 5%.

Yes. This is advice which steers the borrower away from a particular mortgage which the borrower could have entered into.

I recommend that you take out either the ABC Building Society 2 year fixed rate mortgage at 5% or the XYZ Bank standard variable rate mortgage.

Yes. This is advice which steers the borrower in the direction of more than one particular mortgage which the borrower could enter into.

I recommend you take out (or do not take out) an ABC Building Society fixed rate mortgage.

This will depend on the circumstances. If, for example, the society only offers one such mortgage, this would be a recommendation intended implicitly to steer the borrower in the direction of that particular mortgage which the borrower could enter into and therefore would be advice.

I suggest you take out (or do not take out) a mortgage with ABC Building Society.

No. This is not advice which steers the borrower in the direction of a particular mortgage which the borrower could enter into. However, if the society only offers one mortgage, this would be a recommendation intended implicitly to steer the borrower in the direction of that particular mortgage which the borrower could enter into and therefore would be advice.

I suggest you change (or do not change) your current mortgage from a variable rate to a fixed rate.

No in respect of the advice about rate type, as this does not steer the borrower in the direction of a particular mortgage which the borrower could enter into.

Yes in respect of the advice about varying the terms of the particular mortgage that the borrower had already entered into.

I suggest you take out (or do not take out) a variable rate mortgage.

No. This is not advice which steers the borrower in the direction of a particular mortgage which the borrower could enter into.

I recommend you take out (or do not take out) a mortgage.

No. This is not advice which steers the borrower in the direction of a particular mortgage which the borrower could enter into.

I would always recommend buying a house and taking out a mortgage as opposed to renting a property.

No. This is an example of generic advice which does not steer the borrower in the direction of a particular mortgage that he could enter into.

I recommend you do not borrow more than you can comfortably afford.

No. This is an example of generic advice.

If you are looking for flexibility with your mortgage I would recommend you explore the possibilities of either a flexible mortgage or an off-set mortgage. There are a growing number of lenders offering both.

No. This is an example of generic advice.
PERG 4.6.9GRP
In the FSA's view, guiding a person through scripted questions or a decision tree should not, of itself, involve advice within the meaning of article 53A (it should be generic advice). But the combination of advice, which in isolation may properly be considered generic, with the identification of a particular or several particular regulated mortgage contracts may well, in the FSA's view, cause the person to be advising on regulated mortgage contracts; the FSA considers that it
PERG 4.6.10GRP
For the purposes of article 53A, advice must be given to or directed at someone who is acting as borrower or potential borrower. As indicated in PERG 4.4.2 G (Which borrowers?), this means the individual or trustee to whom the credit has been provided by the lender or who is looking to obtain the credit on the security of his property. Advice given to a body corporate will not generally be caught because the advice will not concern a regulated mortgage contract, as defined. But
PERG 4.6.12GRP
Advice will still be covered by article 53A even though it may not be given to or directed at a particular borrower (for example advice given in a periodical publication or on a website).
PERG 4.6.17GRP
Advice under article 53A must relate to the pros or cons of entering into a regulated mortgage contract as borrower.
PERG 4.6.19GRP
Neither does advice on the merits of using a particular mortgage broker or adviser in his capacity as such amount to advice for the purposes of article 53A. It is not advice on the merits of entering into or varying the terms of a regulated mortgage contract.
PERG 4.6.26GRP
With the exception of periodicals, broadcasts and other news or information services (see PERG 4.6.30 G (Exclusion: periodical publications, broadcasts and websites)) the medium used to give advice should make no material difference to whether or not the advice is caught by article 53A.
PERG 4.6.30GRP
The main exclusion from advising on regulated mortgage contracts relates to advice given in periodical publications, regularly updated news and information services and broadcasts (article 54 of the Regulated Activities Order (Advice given in newspapers etc)). The exclusion applies if the principal purpose of any of these is neither to give advice of the kind to which article 53 (Advising on investments) or article 53A applies nor to lead or enable persons to:(1) acquire or dispose
PERG 4.6.31GRP
Article 54A of the Regulated Activities Order excludes from advising on regulated mortgage contracts certain activities of an unauthorised person which is taking advantage of the exclusion from administering a regulated mortgage contract in article 62 (see PERG 4.8.4 G).
PERG 4.6.32GRP
The Regulated Activities Order contains a number of other exclusions which have the effect of preventing certain activities from amounting to advising on regulated mortgage contracts. These are referred to in PERG 4.10 (Exclusions applying to more than one regulated activity).
PERG 4.5.2GRP
The first activity (article 25A(1)) is referred to in this guidance as arranging (bringing about) regulated mortgage contracts. Various points arise:(1) It is not necessary for the potential borrower himself to be involved in making the arrangements.(2) This activity is carried on only if the arrangements bring about, or would bring about a regulated mortgage contract. This is because of the exclusion in article 26 (see PERG 4.5.4 G).(3) This activity therefore includes the activities
PERG 4.5.11GRP
The exclusion applies for introductions to:(1) an authorised person who has permission to carry on a regulated activity specified in article 25A (Arranging regulated mortgage contracts) or article 53A (Advising on regulated mortgage contracts) or article 61(1) (Entering into a regulated mortgage contract as lender); introducers can check the status of an authorised person and its permission by visiting the FSA's registerat http://www.fsa.gov.uk/register/;(2) an appointed representative
PERG 4.10.1GRP
The exclusion in article 67 of the Regulated Activities Order (Activities carried on in the course of a profession or non-investment business) applies to the regulated activities of arranging (bringing about), making arrangements with a view to and advising on regulated mortgage contracts. PERG 4.14 contains further guidance on mortgage activities carried on by professional firms.)
PERG 2.7.16BGRP
Under article 53A of the Regulated Activities Order, giving advice to a person in his capacity as borrower or potential borrower is a regulated activity if it is advice on the merits of the person:(1) entering into a particular regulated mortgage contract; or(2) varying the terms of a regulated mortgage contract.Advice on varying terms as referred to in (2) comes within article 53A only where the borrower entered into the regulated mortgage contract on or after 31 October 2004
PERG 7.3.1AGRP
Under article 53A of the Regulated Activities Order (Advising on regulated mortgage contracts), advising a person is a specified kind of activity if:(1) the advice is given to the person in his capacity as a borrower or potential borrower; and(2) it is advice on the merits of his doing any of the following:(a) entering into a particular regulated mortgage contract; or(b) varying the terms of a regulated mortgage contract entered into by him after mortgage day in such a way as
MIPRU 2.2.2RRP
The firm may allocate the responsibility for its insurance mediation activity to an approved person (or persons) performing:(1) a governing function (other than the non-executive director function); or(2) the apportionment and oversight function; or(3) the significant management (other business operations) function.
PERG 4.3.1GRP
There are six regulated mortgage activities requiring authorisation or exemption if they are carried on in the United Kingdom. These are set out in the Regulated Activities Order. They are:(1) arranging (bringing about) regulated mortgage contracts (article 25 A(1) (Arranging regulated mortgage contracts));(2) making arrangements with a view to regulated mortgage contracts (article 25A(2) (Arranging regulated mortgage contracts));(3) advising on regulated mortgage contracts (article
PERG 4.9.1GRP
Under article 64 of the Regulated Activities Order (Agreeing to carry on specific kinds of activity), in addition to the regulated activities of arranging (bringing about), making arrangements with a view to, advising on, entering into and administering regulated mortgage contracts, agreeing to do any of these things is itself a regulated activity. In the FSA's opinion, this activity concerns the entering into of a legally binding agreement to provide the services that it concerns.
PERG 8.25.2GRP
Article 53 does not apply to advice given on any of the following:(1) deposit or other bank or building society accounts (but note that providing basic advice on a stakeholder product including stakeholder deposit accounts is a separate regulated activity under article 52A of the Regulated Activities Order - see the guidance in PERG 2.7.14A G (Providing basic advice on stakeholder products));(2) interests under the trusts of an occupational pension scheme (but rights under an
PERG 4.14.2GRP
In the FSA's view, the following exclusions are likely, in many cases, to exclude the normal activities of professional firms from amounting to regulated mortgage activities:(1) article 67 of the Regulated Activities Order (Activities carried on in the course of a profession or non-investment business), which applies in relation to the advising and arranging activities (see PERG 4.10.1 G);(2) article 66 of the Regulated Activities Order (Trustees, nominees and personal representatives)
PERG 4.16.4GRP
If an unauthorised SPV arranges for an authorised person with permission to administer a regulated mortgage contract to administer its regulated mortgage contracts, it can avoid carrying on the regulated activities of:(1) administering a regulated mortgage contract, because of the exclusion in article 62 of the Regulated Activities Order (described in PERG 4.8.4 G);(2) arranging (bringing about) or making arrangements with a view to regulated mortgage contracts, because any arrangements
PERG 1.4.2GRP

Table: list of general guidance to be found in PERG.

Chapter:

Applicable to:

About:

PERG 2:

Authorisation and regulated activities

PERG 3:

Issuing e-money

a person who needs to know

  • whether a particular electronic payment product ise-money and whether the person issuing it needs to beauthorised under the Act
  • whether any communications about the product will be restricted

PERG 4:

Regulated activities connected with mortgages

any person who needs to know whether the activities he conducts in relation to mortgages are subject to FSA regulation. This is likely to include:

  • lenders
  • administration service providers
  • mortgage brokers and advisers

the scope of relevant orders (in particular, the Regulated Activities Order) as respects activities concerned with mortgages

PERG 5:

Insurance

mediation

activities

any person who needs to know whether he carries on insurance mediation activities and is, thereby, subject to FSA regulation. This is likely to include:

the scope of relevant orders (in particular, the Regulated Activities Order) as respects activities concerned with the sale or administration of insurance

PERG 6:

Identification of contracts of insurance

any person who needs to know whether a contract with which he is involved is a contract of insurance

the general principles and range of specific factors that the FSA regards as relevant in deciding whether any arrangement is a contract of insurance

PERG 7:

Periodical publications, news services and broadcasts: application for certification

any person who needs to know whether he will be regulated for providing advice about investments through the medium of a periodical publication, a broadcast or a news service

PERG 8:

Financial promotion and related activities

any person who needs to know

PERG 9:

Meaning of open-ended investment company

any person who needs to know whether a body corporate is an open-ended investment company as defined in section 236 of the Act (Open-ended investment companies) and is therefore a collective investment scheme.

the circumstances in which a body corporate will be an open-ended investment company

PERG 10:

Activities related to pension schemes

Any person who needs to know whether his activities in relation to pension schemes will amount to regulated activities or whether the restriction in section 21 of the Act will apply to any financial promotions he may make.1

1

  • the regulated activities that arise in connection with the establishment and operation of pension schemes and any exclusions that may be relevant
  • the circumstances in which financial promotions about pension schemes may be exempt from the restriction in section 21 of the Act1

4PERG 11:

Property investment clubs and land investment schemes

Any person who needs to know whether his activities in relation to property investment clubs and land investment schemes will amount to regulated activities or whether the restriction in section 21 of the Act will apply to any financial promotions he may make.

  • the regulated activities that may arise in connection with the establishment and operation of property investment clubs and land investment schemes and any exclusions that may be relevant
  • the extent to which the financial promotion restriction in section 21 of the Act applies

2PERG 12:

Running or advising on personal pension schemes

any person who needs to know whether his activities in relation to establishing, running, advising on or marketing personal pension schemes will amount to regulated activities

the regulated activities that arise in connection with establishing, running, advising on or marketing personal pension schemes and any exclusions that may be relevant

3PERG 13:

Guidance on the scope of the Markets in Financial Instruments Directive and the recast Capital Adequacy Directive

[to be issued]

3PERG 14:

Home reversion and home finance activities

Any person who needs to know whether his activities in relation to home reversion plans or home purchase plans will amount to regulated activities or whether the restriction in section 21 of the Act will apply to any financial promotions he may make.