Related provisions for PERG 4.6.8
21 - 40 of 133 items.
The various exclusions outlined below deal with a range of different circumstances. (1) Each set of circumstances described in PERG 2.9.3 G to PERG 2.9.17 G has some application to several regulated activities relating to securities, relevant investments orhome finance transactions.4 They have no effect in relation to the separate regulated activities of accepting deposits, issuing electronic money,9effecting or carrying out contracts of insurance, bidding in emissions auctions,10advising
The exclusions grouped together in the Regulated Activities Order are described below in this chapter in general terms. The exact terms of each exclusion will need to be considered by any person who is considering whether they need authorisation. Each description is accompanied by an indication of which regulated activities are affected.
This group of exclusions applies, in specified circumstances, to the regulated activities of:(1) dealing in investments as principal;(2) arranging (bringing about) dealsininvestments and4making arrangements with a view to transactions in investments;44(2A) arranging a home finance transaction;4(3) managing investments;(4) assisting in the administration and performance of a contract of insurance;(5) safeguarding and administering investments;(6) sending dematerialised instructions;(7)
This group of exclusions applies, in specified circumstances, to the regulated activities of:(1) dealing in investments as agent;(2) arranging (bringing about) deals in investments, and4making arrangements with a view to transactions in investments;44(2A) arranging a home finance transaction;4(3) assisting in the administration and performance of a contract of insurance;(4) safeguarding and administering investments; and(5) advising on investments or advising on a home finance
(1) In accordance with article 3(2) of the E-Commerce Directive, all requirements on persons providing electronic commerce activities into the United Kingdom from the EEA are lifted, where these fall within the co-ordinated field and would restrict the freedom of such a firm to provide services. The coordinated field includes any requirement of a general or specific nature concerning the taking up or pursuit of electronic commerce activities. Authorisation requirements fall within
Some software services involve the generation of specific buy, sell or hold signals relating to particular investments. These signals are liable, as a general rule, to be advice for the purposes of article 53 (as well as financial promotions) given by the person responsible for the provision of the software. The exception to this is where the user of the software is required to use enough control over the setting of parameters and inputting of information for the signals to be
Without an explicit or implicit recommendation on the merits of buying or selling an investment, advice will not be covered by article 53 if it is advice on:(1) the likely meaning of uncertain provisions in an investment agreement; or(2) how to complete an application form; or(3) the value of investments for which there is no ready market; or(4) the effect of contractual terms and their commercial consequences; or(5) how to structure a transaction to comply with regulatory, competition
1Typical recommendations and whether they will be regulated as advising on investments under article 53 of the Regulated Activities Order. This table belongs to PERG 8.29.1 G to PERG 8.29.6 G.2
Recommendation |
Regulated under article 53 or not? |
I recommend that you take out the ABC investment. |
Yes. This is advice which steers the client in the direction of a particular investment which the client could buy. |
I recommend that you do not take out the ABC investment. |
Yes. This is advice which steers the client away from a particular investment which the client could have bought. |
I recommend that you take out either the ABC investment or the DEF investment. |
Yes. This is advice which steers the client in the direction of more than one particular investment which the client could buy. |
I recommend that you sell your ABC investment. |
Yes. This is advice which steers the client in the direction of a particular investment which the client could sell. |
I recommend that you do not sell your ABC investment. |
Yes. This is advice which steers the client away from a particular investment which the client could have sold. |
I recommend that you transfer ownership of your ABC investment to your spouse. |
Advising the client to gift an investment to another person will not be advice because it does not involve advice on buying, selling, subscribing for or underwriting an investment. |
I recommend that you increase the regular payments you are making to your GHI fund*. |
Yes. This is advice which steers the client in the direction of acquiring further units in a particular fund. |
I recommend that you decrease the regular payments you are making to your GHI fund*. |
Yes. This is advice which steers the client in the direction of acquiring further units in a particular fund but advises against the client buying as many as he intended. |
I recommend that you keep making the same regular payments to your GHI fund*. |
Yes. This is advice which steers the client in the direction of acquiring further units in a particular fund. |
I recommend that you stop making the regular payments you are making to the GHI fund*. |
Yes. This is advice which steers the client away from buying units in a particular fund which the client could have bought. |
I recommend that you pay a lump sum into your GHI fund*. |
Yes. This is advice which steers the client in the direction of acquiring further units in a particular fund. |
I recommend that you do not pay a lump sum into your GHI fund*. |
Yes. This is advice which steers the client away from buying units in a particular fund which the client could have bought. |
I recommend that you move part of your investment in the JKL investment from fund X into fund Y*. |
Yes. This is advice which steers the client in the direction of selling units in a particular fund and buying units in another specific fund. Where the two funds are sub-funds of the same main fund it is still advice. The terms ‘bought’ and ‘sold’ are given a wide meaning and include any acquisition or disposal for valuable consideration. |
I recommend that you move all of your investment in JKL investment from fund X into fund Y*. |
Yes, for the same reason. |
I recommend that you move your MNO investment from platform X and re-register it on platform Y. |
This is unlikely to be advice because normally it will not involve buying and selling the investment held on the platform. |
A client decides of his own accord to increase, decrease or temporarily suspend his regular payments or the payments are increased automatically into an investment without advice being given. |
No. No advice is being given. |
The firm is providing discretionary management services under a mandate and makes changes to a client'sinvestment without providing advice. |
No. No advice is being given. |
Dividends are re-invested into an investment without advice being given. |
No. No advice is being given. |
* The same answer would apply where the fund is a life policy as rights under a contract of insurance are regulated investments under the Act. The position under a personal pension scheme is similar, as explained in more detail in PERG 12.3. |
|
Generic advice will not be caught by article 53. Examples of generic advice may include:(1) financial planning;(2) advice on the merits of investing in Japan rather than Europe;(3) advice on the merits of investing in investment trusts as opposed to unit trusts or unit-linked insurance; and(4) advice on the merits of investing offshore, or in fixed income rather than floating rate bonds.
In the FCA's view, guiding a person through a decision tree should not, of itself, involve advice within the meaning of article 53 (it should be generic advice). For example, helping a person to understand what the questions or options are and how to determine which option applies to his particular circumstances. But a recommendation that the person concerned should, if the results of using the decision tree so indicate, buy a stakeholder personal pension from a particular provider
For the purposes of article 53 of the Regulated Activities Order, a security or relevant investment is any one of the following:(1) shares;(2) debentures;(2A) alternative debentures;2(3) government and public securities;(4) warrants;(5) certificates representing certain securities;(6) units in collective investment schemes;(7) stakeholder pension schemes or personal pension schemes1;(8) options;(9) futures;(10) contracts for differences;(11) contracts of insurance;(12) funeral
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
This guidance is based on the statutory instruments made as part of implementing the IMD in the United Kingdom. This legislation includes the Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) (No.2) Order 2003 (S.I. 2003/1476), which amends among others the Regulated Activities Order, the Financial Services and Markets Act 2000 (Appointed Representatives) Regulations 2001 (S.I. 2003/1217), the Non-Exempt Activities Order and the Business Order. Other legislation
The United Kingdom's approach to implementing the IMD by domestic legislation is, in part, through secondary legislation, which will apply pre-existing regulated activities (slightly amended) in the Regulated Activities Order to the component elements of the insurance mediation definition in the IMD (see PERG 5.2.5 G and the text of article 2.3 IMD in PERG 5.16.2 G (article 2.3 of the Insurance Mediation Directive)).
The effect of the IMD and its implementation described in PERG 5.2.5 G to PERG 5.2.6 G is to vary the application of the existing regulated activities set out in PERG 5.2.8G (1) to PERG 5.2.8G (3), PERG 5.2.8G (5) and PERG 5.2.8G (6), principally by applying these regulated activities to general insurance contracts and pure protection contracts and by making changes to the application of the various exclusions to these regulated activities. These regulated activities applied prior
It is the scope of the Regulated Activities Order rather than the IMD which will determine whether a person requires authorisation or exemption. However, the scope of the IMD is relevant to the application of certain exclusions under the Regulated Activities Order (see, for example, the commentary on article 67 in PERG 5.11.9 G (Activities carried on in the course of a profession or non-investment business)).
The FCA will form an overall view as to the purpose (or purposes) underlying the publication or service. It will then determine whether the principal purpose is neither of those referred to in article 54 of the Regulated Activities Order. Because the possible range of subject matter covered by different publications or services is very wide it is not possible to apply standard tests. The FCA will form a judgment as to the overall impression created by the publication or service.
If the FCA decides to grant the application it will issue a certificate. The certificate will normally be granted for an indefinite period. It will state what it is that the FCA considers constitutes the periodical or service in relation to which the FCA is satisfied that the exclusion in article 54 of the Regulated Activities Order applies. In many cases this will be self-evident. But it may sometimes be necessary to include further details in the certificate indicating what
An application may be refused on the grounds that the FCA is not satisfied that the principal purpose of the publication or service is neither of those mentioned in article 54(1)(a) or (b) of the Regulated Activities Order (see PERG 7.4.5 G). An application may also be refused on the grounds that the FCA considers that the vehicle through which advice is to be given is not a newspaper, journal, magazine or other periodical publication, a regularly updated news or information service
The Regulated Activities Order does not attempt an exhaustive definition of a 'contract of insurance'. Instead, article 3(1) of the order (Interpretation) makes some specific extensions and limitations to the general common law meaning of the concept. For example, article 3(1) expressly extends the concept to fidelity bonds and similar contracts of guarantee, which are not contracts of insurance at common law, and it excludes certain funeral plan contracts, which would generally
The Regulated Activities Order does not define a reinsurance contract. The essential elements of the common law description of a contract of insurance are also the essential elements of a reinsurance contract. Whilst the IMD addresses insurance and reinsurance separately, throughout this guidance the term 'contract of insurance' (italicised or otherwise) also applies to contracts of reinsurance.
Article 72B of the Regulated Activities Order (Activities carried on by a provider of relevant goods or services) excludes from FCA regulation certain regulated activities carried on by providers of non-motor goods and services related to travel in relation to contracts of insurance that satisfy a number of conditions. Details about the scope of this exclusion can be found at PERG 5.11.13 G to PERG 5.11.15 G (Activities carried on by a provider of relevant goods or services)
For an activity to be a regulated activity, it must be carried on in relation to 'specified investments' (see section 22 of the Act Regulated activities) and Part III of the Regulated Activities Order (Specified investments)). For the purposes of insurance mediation activity, specified investments include the following 'relevant investments' defined in article 3(1) of the Regulated Activities Order (Interpretation):(1) rights under any contract of insurance (see article 75 (Contracts
Under article 53 of the Regulated Activities Order, advising on investments covers advice which:(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) is advice on the merits of his (whether as principal or agent) buying, selling, subscribing for or underwriting a particular investment which is a security or a relevant investment or exercising any right conferred by such an investment
Each of the aspects referred to in PERG 8.24.2 G is considered in greater detail in PERG 8.25 to PERG 8.29. In addition, under article 52A of the Regulated Activities Order, providing basic advice on a stakeholder product is a regulated activity and under article 56 of the Regulated Activities Order, advising a person to become, or continue or cease to be a member of a particular Lloyd’s syndicate is a regulated activity.
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 FCA's opinion, this activity concerns the entering into of a legally binding agreement to provide the services that it concerns.
The Regulated Activities Order contains an exclusion which has the effect of preventing certain activities of trustees, nominees and personal representatives from amounting to entering into a regulated mortgage contract. This is referred to in PERG 4.10 (Exclusions applying to more than one regulated activity). There is also an exclusion where both the lender and borrower are overseas, which is referred to in PERG 4.11 (Link between activities and the United Kingdom)..
The article 55 exemption also requires that:(1) the financial promotion relates to an activity to which the Part XX exemption applies or which would be a regulated activity but for the exclusion in article 67 of the Regulated Activities Order (Activities carried on in the course of a profession or non-investment business) which concerns activities which are a necessary part of professional services; and(2) the activity to which the financial promotion relates would be undertaken
One of the effects of the requirements in PERG 8.15.2 G concerns financial promotions which relate to an activity which is not a regulated activity as the result of an exclusion in the Regulated Activities Order. In this case, a professional firm using the Part XX exemption cannot make a real time financial promotion relying on article 55 of the Financial Promotion Order unless the exclusion is provided by article 67 of the Regulated Activities Order. Neither can a professional
The article 55A exemption should enable professional firms to issue brochures, websites and other non-real time financial promotions without any need for approval by an authorised person. This is provided the financial promotion does not also contain an invitation or inducement relating to regulated activities other than those covered by the Part XX exemption. In this respect, it should be noted that, unlike article 55, the article 55A exemption does not extend to activities which
Under section 19 of the Act (The general prohibition) no person may, by way of business, carry on a regulated activity in the United Kingdom unless he is authorised or exempt. The meaning of regulated activity is set out in Part II of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (the Regulated Activities Order) (as amended). Any person who breaches section 19 of the Act commits a criminal offence for which the maximum penalty is two years’ imprisonment
The regulated activities which are likely to be conducted in the circumstances referred to in PERG 8.23.2 G are:(1) giving advice on certain investments (articles 53 (Advising on investments), 53A (Advising on regulated mortgage contracts), 53B (Advising on regulated home reversion plans), 53C (Advising on regulated home purchase plans), 53D (Advising on regulated sale and rent back agreements)2 and 56 (Advice on syndicate participation at Lloyd’s) of the Regulated Activities
The table in PERG 5.15.4 G is designed as a short, user-friendly guide but should be read in conjunction with the relevant sections of the text of this guidance. It is not a substitute for consulting the text of this guidance or seeking professional advice as appropriate (see PERG 5.1.6 G on the effect of this guidance). References in this table to articles are to articles of the Regulated Activities Order. In this table, it is assumed that each of the activities described is
The regulated activity of assisting in the administration and performance of a contract of insurance (article 39A) relates, in broad terms, to activities carried on by intermediaries after the conclusion of a contract of insurance and for or on behalf of policyholders, in particular in the event of a claim. Loss assessors acting on behalf of policyholders in the event of a claim are, therefore, likely in many cases to be carrying on this regulated activity. By contrast, claims
By article 39B of the Regulated Activities Order (Claims management on behalf of an insurer etc):(1) loss adjusting on behalf of a relevant insurer (see PERG 5.7.8 G);(2) expert appraisal; and(3) managing claims for a relevant insurer;are also excluded from the regulated activity of assisting in the administration and performance of a contract of insurance. This is where the activity is carried on in the course of carrying on any profession or business (see also PERG 5.14 (Exemptions)).
A 'relevant insurer' for the purposes of article 39B means:(1) an authorised person who has permission for effectingand carrying out contracts of insurance; or(2) a member of the Society of Lloyd's or the members of the Society of Lloyd's taken together; or(3) an EEA firm that is an insurer; or(4) a reinsurer, being a person whose main business consists of accepting risks ceded by a person falling under (1), (2) or (3) or a person who is established outside the United Kingdom
The effect of article 28A of the Regulated Activities Order would normally mean that arrangements made by a party to a home finance transaction3 would not fall within the home finance activity3 of arranging. So in a direct sale, a home finance provider3 would not be carrying on the regulated activity of arranging but, where the transaction proceeds to completion, would instead be involved in a regulated activity comprising entering into a home finance transaction3. However, the
The Act provides that appointed representatives (see PERG 2.10.5 G), recognised investment exchanges and recognised clearing houses (see PERG 2.10.6 G) and certain other persons exempt under miscellaneous provisions (see PERG 2.10.7 G) are exempt persons. Members of Lloyds and members of the professions are not 'exempt persons' as such, but the general prohibition in section 19 of the Act only applies to them in certain circumstances. The distinction is significant in relation
A person is exempt if he is an appointed representative of an authorised person. See SUP 12 (Appointed representatives). But where an appointed representative carries on insurance mediation or reinsurance mediation he will not be exempt unless he is included on the register kept by the FCA under article 93 of the Regulated Activities Order (Duty to maintain a record of unauthorised persons carrying on insurance mediation activities) (see PERG 5.13 (Appointed representatives
A person carrying on regulated activities under the regime for members of the professions will be subject to rules made by the professional body designated by the Treasury. Such bodies are obliged to make rules governing the carrying on by their members of those regulated activities that they are able to carry on without authorisation under the Act. Where such a person is carrying on insurance mediation or reinsurance mediation, he must also be included on the register kept by
Financial promotions made only to or directed only at certain types of person who are sophisticated enough to understand the risks involved are exempt. These are:(1) authorised persons;(2) exempt persons (where the financial promotion relates to a controlled activity which is a regulated activity for which the person is exempt);(3) governments and local authorities; and(4) persons whose ordinary business involves carrying on a controlled activity of the kind to which the financial
The Treasury, in making the Financial Promotion Order, noted that financial journalism has an important part to play in increasing consumer awareness of financial services and products. It further observed the need to strike the right balance between protecting consumers and ensuring that the level of regulation is as light as possible, while respecting the principle of the freedom of the press.
With this objective in mind, the exemption in article 20 applies to any non-real time financial promotion the contents of which are devised by a person acting as a journalist where the financial promotion is in:1(1) a newspaper, journal, magazine or other periodical publication;(2) a regularly updated news or information service (such as a website or teletext service); or(3) a television or radio broadcast or transmission.In addition, the publication, service or broadcast must
Article 20A provides a further exemption for certain financial promotionscommunicated by means of a service or broadcast which satisfies the principal purpose test in article 54 of the Regulated Activity Order (see PERG 8.12.25 G and PERG 7). Readers of this section should also refer to the guidance on company statements in PERG 8.21.1
(1) Introductions may take many forms but typically involve an offer to make an introduction or action taken in response to an unsolicited request. An introduction may be an inducement if the introducer is actively seeking to persuade or incite the person he is introducing to do business with the person to whom the introduction is made. So it may fall under section 21 if its purpose is to lead to investment activity. For example, if a person answers the question ‘do you or can
A person ('P') may be engaged, typically by investment product companies, to provide telephone services. Where such services require P to seek to persuade or incite prospective customers to receive investment literature or a personal call or visit from a representative of his principal they will frequently involve inducements to engage in investment activity. This is so whether the inducement results from P making unsolicited calls or by his raising the issue during a call made
A personal illustration (for instance, of the costs of and benefits under a particular investment product) may or may not be an invitation or inducement. This will depend on the extent to which it seeks to persuade or incite the recipient to invest as opposed to merely providing him with information. A personal illustration may, however, be accompanied by an invitation or inducement to buy the investment in which case the exemptions for one-off financial promotions in articles
Employers and their contracted service providers 6may communicate with employees on matters which involve controlled investments. For example, work-related insurance, staff mortgages,6personal pension schemes (including stakeholder schemes) and other employee benefit schemes other than occupational pension schemes. Interests under the trusts of an occupational pension scheme are not a controlled investment (see paragraph 27 (2) of Schedule 1 to the Financial Promotion Order).In
For the purposes of the CMAR:(1) client money is that to which the client money rules in CASS 7 apply; and(2) safe custody assets are those to which the custody rules in CASS 6 apply4 but only in relation to the holding of financial instruments (in the course of MiFID business),5 the safeguarding and administration of assets (without arranging) (in the course of business that is not MiFID business), acting as trustee or depositary of an AIF and acting as trustee or depositary
For the avoidance of doubt, the effect of SUP 16.14.4 R is that the following are4 to be excluded from any calculations which the CMAR requires:444(1) any client money held by the firm in accordance with CASS 5;4(2) any safe custody assets in respect of which the firm is merely arranging safeguarding and administration of assets in accordance with CASS 6; and4(3) any client money or safe custody assets in respect of which the firm merely has a mandate in accordance with CASS