Related provisions for PERG 5.8.26

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PERG 5.8.1GRP
Article 53 of the Regulated Activities Order (Advising on Investments) makes advising on contracts of insurance a regulated activity. This covers advice which is both:(1) given to a person in his capacity as an insured or potential insured, or as agent for an insured or a potential insured; and(2) advice on the merits of the insured or his agent:(a) buying, selling, subscribing for or underwriting a particular contract of insurance; or(b) exercising any right conferred by a contract
PERG 5.8.4GRP
Advice about contracts of insurance will come within the regulated activity in article 53 of the Regulated Activities Order only if it relates to a particular contract of insurance. So, generic or general advice will not fall under article 53. In particular:(1) advice would come within article 53 if it took the form of a recommendation that a person should buy the ABC Insurers motor insurance;(2) advice would not relate to a particular contract if it consists of a recommendation
PERG 5.8.5GRP

Typical recommendations and whether they will be regulated as advice on contracts of insurance under article 53 of the Regulated Activities Order. This table belongs to PERG 5.8.4 G

Recommendation

Regulated under article 53 or not?

I recommend you take the ABC Insurers motor insurance policy

Yes.

This is even the case if ABC Insurers has many different motor insurance policies, as explained in PERG 4.6.6 G. Although PERG 4.6.6 G is about mortgages the same reason applies to insurance.1

I recommend that you take out the GHI Insurers life insurance policy

Yes

I recommend that you do not take out the ABC Insurers motor insurance policy

Yes. See the entry in this table for the recommendation to take out the ABC Insurers motor insurance policy.1

I recommend that you do not take out the GHI Insurers life insurance policy

Yes

I recommend that you take out either the ABC Insurers motor insurance policy or the DEF Insurers motor insurance policy

Yes

I recommend that you take out either the GHI Insurers life insurance policy or the JKL Insurers life insurance policy

Yes1

I recommend that you take out (or do not take out) contents insurance

No, unless a specific insurance policy is implied by the context

I recommend that you take out (or do not take out) life insurance

No, unless a specific insurance policy is implied by the context
PERG 5.8.6GRP
For the purposes of article 53, advice must be given to a person in his capacity as an investor or potential investor (which, in the context of contracts of insurance, will mean as policyholder or potential policyholder). So, article 53 will not apply where advice is given to persons who receive it as:(1) an adviser who will use it only to inform advice given by him to others; or(2) a journalist or broadcaster who will use it only for journalistic purposes.
PERG 5.8.7GRP
Advice will still be covered by article 53 even though it may not be given to any particular policyholder (for example, advice given in a periodical publication or on a website).
PERG 5.8.10GRP
In the case of article 53, information relating to buying or sellingcontracts of insurance may often involve one or more of the following:(1) an explanation of the terms and conditions of a contract of insurance whether given orally or in writing or by providing leaflets and brochures;(2) a comparison of the features and benefits of one contract of insurance compared to another;(3) the production of pre-purchase questions for a person to use in order to exclude options that would
PERG 5.8.11GRP
In the FCA's opinion, however, such information is likely to take on the nature of advice if the circumstances in which it is provided give it the force of a recommendation. Examples of situations where information provided by a person (P) might take the form of advice are given below.(1) P may provide information on a selected, rather than balanced and neutral, basis that would tend to influence the decision of a person. This may arise where P offers to provide information about
PERG 5.8.12GRP
Advice under article 53 relates to the advantages and disadvantages of buying, selling, subscribing for or underwriting a particular contract of insurance. It is worth noting that, in this context, 'buying' and 'selling' are defined widely under article 3 of the Regulated Activities Order (Interpretation). 'Buying' includes acquiring for valuable consideration, and 'selling' includes surrendering, assigning or converting rights under a contract of insurance.
PERG 5.8.13GRP
The requirements imposed by the IMD (see PERG 5.2.5 G (Approach to implementation of the IMD)) and the text of article 2.3 IMD in PERG 5.16.1 G (article 2.3 of the Insurance Mediation Directive) are narrower than the scope of the Regulated Activities Order (see PERG 5.2.7 G (Approach to implementation of the IMD)). This is that, unlike the Regulated Activities Order, they do not relate to the assignment of contracts of insurance. This is of relevance to, amongst others, persons
PERG 5.8.14GRP
Generally speaking, advice on the merits of using a particular insurance undertaking, broker or adviser in their capacity as such, does not amount to advice for the purpose of article 53. It is not advice on the merits of buying or selling a particular contract of insurance (unless, in the circumstances, the advice amounts to an implied recommendation of a particular policy).
PERG 5.8.20GRP
With the exception of:(1) periodicals, broadcasts and other news or information services (see PERG 5.8.24 G to PERG 5.8.25 G (Exclusion: periodical publications, broadcasts and web-sites)); and(2) situations involving an overseas element (see, generally, PERG 5.12 (Link between activities and the United Kingdom) and, in particular, PERG 5.12.8 G (Where is insurance mediation carried on?));the use of the medium itself to give advice should make no material difference to whether
PERG 5.8.24GRP
An important exclusion from advising on contracts of insurance 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 the publication or service taken as a whole (including any advertising content) is neither to give advice of a kind mentioned in article 53 (Advising on investments) or article
PERG 5.6.1GRP
Article 25 of the Regulated Activities Order (Arranging deals in investments) describes two types of regulated activities concerned with arranging deals in respect of contracts of insurance. These are:(1) arranging (bringing about) deals in investments (article 25(1) (Arranging deals in investments)); and(2) making arrangements with a view to transactions in investments (article 25(2) (Arranging deals in investments)).
PERG 5.6.2GRP
The activity in article 25(1) is carried on only if the arrangements bring about, or would bring about, the transaction to which the arrangement relates. This is because of the exclusion in article 26 of the Regulated Activities Order (Arrangements not causing a deal). Article 26 excludes from article 25(1) arrangements which do not bring about or would not bring about the transaction to which the arrangements relate. In the FCA's view, a person would bring about a contract of
PERG 5.6.12GRP
Article 28 of the Regulated Activities Order (Arranging transactions to which the arranger is a party) excludes from the regulated activities in article 25(1) and 25(2) arrangements made for or with a view to contracts of insurance when:(1) the person (P) making the arrangements is the only policyholder; or(2) P, as a result of the transaction, would become the only policyholder.
PERG 5.6.16GRP
The restriction in the scope of article 28 raises an issue where there is a trust with co-trustees, where each trustee will be a policyholder with equal rights and obligations. If the activities of one of the trustees include arranging in respect of contracts of insurance, that trustee could be viewed as arranging on behalf of his co-trustees who will also be policyholders. Similar issues also arise in respect of trustees assisting in the administration and performance of a contract
PERG 5.6.17GRP
Article 33 of the Regulated Activities Order (Introducing) excludes arrangements which would otherwise fall under article 25(2) where:(1) they are arrangements under which persons will be introduced to another person;(2) the person to whom introductions are to be made is:(a) an authorised person; or(b) an exempt person acting in the course of business comprising a regulated activity in relation to which he is exempt; or(c) a person who is not unlawfully carrying on regulated activities
PERG 5.6.18GRP
The effect of PERG 5.6.17G (4) is that some persons who, in making introductions, are making arrangements with a view to transactions in investments under article 25(2) of the Regulated Activities Order, cannot use the introducing exclusion. This is if, in general terms, the arrangements for making introductions relate to contracts of insurance (PERG 5.6.19 G has further guidance on when arrangements for introductions may be regarded as relating to contracts of insurance). However,
PERG 5.6.19GRP
Where a person is making arrangements with a view to transactions in investments by way of making introductions, and he is not completely indifferent to whether or not transactions may result, it may still be the case that the exclusion in article 33 will apply. In the FCA's view, this is where:(1) the introduction is for independent advice on investments generally; and(2) the introducer is indifferent as to whether or not a contract of insurance may ultimately be bought (or
PERG 5.6.22GRP
An unauthorised person who makes arrangements with a view to a person who participates in the arrangements buying or sellingcontracts of insurance may be excluded from article 25(2) by article 32 of the Regulated Activities Order (Provision of finance). This is provided the sole purpose of the arrangements is the provision of finance to enable the person to buy the contract of insurance. Premium finance companies may be able to rely on this exclusion provided the arrangements
PERG 5.11.3GRP
The exclusions outlined in (1) to (7) were available to intermediaries (and in some cases insurance undertakings) acting in connection with life policies before 14 January 2005. In essence, however, the following exclusions do not apply if they concern transactions relating to contracts of insurance:(1) dealing in investments as agent with or through authorised persons (article 22 of the Regulated Activities Order (Deals with or through authorised persons));(2) arranging transactions
PERG 5.11.6GRP
(1) The removal of the exclusion for groups and joint enterprises in article 69 of the Regulated Activities Order (Groups and joint enterprises) may have implications for a company providing services for:(a) other members of its group; or(b) other participants in a joint enterprise of which it is a participant.(2) Such companies might typically provide risk or treasury management or administration services which may include regulated activities relating to a contract of insurance.
PERG 5.11.8GRP
Chapter XVII of the Regulated Activities Order (Exclusions applying to several specified kinds of activity) contains various exclusions applying to several kinds of activity. Five3exclusions of relevance in relation to contracts of insurance are dealt with in this section and a sixth3, overseas persons, in PERG 5.12 (Link between activities and the United Kingdom).43443
PERG 5.11.11GRP
Article 67 may also apply to activities relating to assignments of insurance policies, as, in the FCA's view, article 2.3 of the IMD applies essentially to the creation of new contracts of insurance and not the assignment of rights under existing policies. As such, where a solicitor or licensed conveyancer arranges an assignment of a contract of insurance, the exclusion in article 67 remains of potential application. For similar reasons, trustees advising on or arranging assignments
PERG 5.11.13GRP
Article 72B (see also PERG 5.3.7 G (Connected contracts of insurance)) may be of relevance to persons who supply non-motor goods or provide services related to travel in the course of carrying on a profession or business which does not otherwise consist of carrying on regulated activities. In the FCA's view, the fact that a person may carry on regulated activities in the course of the carrying on of a profession or business does not, of itself, mean that the profession or business
PERG 5.11.18GRP
3Article 72G (Local authorities) excludes from the activities of dealing in investments as agent, arranging (bringing about) deals in investments, making arrangements with a view to transactions in investments, assisting in the administration and performance of a contract of insurance and advising on investments any activity carried on by a local authority which relates to a contract of insurance which is not a life policy.
PERG 2.6.6GRP
There are two main sorts of contracts of insurance. These are general insurance contracts and long-term insurance contracts. The Regulated Activities Order provides that, in certain specified circumstances, a contract is to be treated as a long-term insurance contract notwithstanding that it contains supplementary provisions that might also be regarded as relating to a general insurance contract (see article 3(3)).
PERG 2.6.7GRP
The Regulated Activities Order uses two further terms in relation to contracts of insurance to identify those contracts under which rights are treated as contractually based investments.(1) The first term is 'qualifying contracts of insurance' (referred to as life policies in the Handbook). This identifies those long-term insurance contracts under which rights are treated as contractually based investments. This term does not cover long-term insurance contracts which are contracts
PERG 2.6.12GRP
Certain instruments are excluded from both of the6 categories of specified investments referred to in PERG 2.6.11 G6. These include trade bills, specified banking documents (such as cheques and banknotes though not bills of exchange accepted by a banker) and contracts of insurance. There is a further exclusion from this category of specified investment dealing with public debt for National Savings deposits and products. However, for the purposes of article 78 of the Financial
PERG 2.8.5GRP
The regulated activity of dealing in investments as agent applies to specified transactions relating to any security or to any relevant investment (apart from rights under funeral plan contracts or rights to or interests in such rights). In addition, the activity is cut back by exclusions as follows.(1) An exclusion applies to certain transactions entered into by an agent who is not an authorised person which depend on him dealing with (or through) an authorised person. It does
PERG 2.8.6AGRP
3The exclusions in the Regulated Activities Order that relate to the various arranging activities are as follows.(-1) 8Under Article 24A(2), an activity that would otherwise be both arranging and bidding in emissions auctions is specifically excluded from arranging because the activity of bidding in emissions auctions does not form part of any other regulated activity (see PERG 2.7.6D G).(1) Under article 26, arrangements that do not or would not bring about the transaction to
PERG 2.8.8GRP
The exclusions from the regulated activity of safeguarding and administering investments are as follows.(1) Safeguarding and administration activities carried on by one person are excluded if a specified third party undertakes a responsibility for the assets which is no less onerous than it would have been if he were doing the safeguarding and administration himself. The effect of this is that an authorised person with permission to carry on this regulated activity (or in certain
PERG 5.3.2GRP
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
PERG 5.3.5GRP
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.
PERG 5.3.7GRP
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)
PERG 5.3.9GRP
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
PERG 5.2.7GRP
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
PERG 2.9.24GRP
(1) 12Subject to (2) and (3), the exclusions apply, in relation to any activity carried on by a local authority.(2) The exclusion relating to the regulated activities of:(a) dealing in investments as agents;(b) arranging (bringing about) deals in investments;(c) making arrangements with a view to transactions in investments;(d) assisting in the administration and performance of a contract of insurance; and(e) advising on investments;applies to any activity carried on by a local
SUP App 3.10.3GRP
The meaning of contract of insurance is set out in article 3(1) of the Regulated Activities Order (Interpretation). It does not include benefit-in-kind funeral plans, which are specified in article 60 of the Regulated Activities Order (plans covered by insurance or trust arrangements). Such funeral plans (to the extent that they are insurance) are also excluded from theSolvency II Directive.7 It covers some contracts which might not otherwise be viewed as insurance in the United
SUP App 3.10.4GRP
Article 1 of the Solvency II Directive provides that the Directive “lays down rules concerning... the taking up and pursuit, within the Community, of the self-employed activities of direct insurance and reinsurance". Article7 10 of the Regulated Activities Order (Effecting and carrying out contracts of insurance) also covers reinsurance.7
PERG 8.32.12GRP
Where persons are making arrangements concerning contracts of insurance or are carrying on insurance mediation or reinsurance mediation, certain exclusions to article 25 are not available. This results from the requirements of the Insurance Mediation Directive and is explained in more detail in PERG 5.6 (Insurance mediation activities The regulated activities: arranging deals in, and making arrangements with a view to transactions in, contracts of insurance).
PERG 8.27.1GRP
For the purposes of article 53, advice must be given to or directed at someone who either holds investments or is a prospective investor (or their agent). Where the investment is a risk-only contract of insurance such as house contents insurance, the policyholder or prospective policyholder is regarded as an investor.
SUP App 3.9.7GRP

Table 2B: Insurance Mediation Directive2 Activities

2

Part II RAO Activities

Part III RAO Investments

1.

Introducing, proposing or carrying out other work preparatory to the conclusion of contracts of insurance.

Articles 25, 53 and 64

Articles 75, 89 (see Note 1)

2.

Concluding contracts of insurance

Articles 21, 25, 53 and 64

Articles 75, 89

3.

Assisting in the administration and performance of contracts of insurance, in particular in the event of a claim.

Articles 39A, 64

Articles 75, 89

Note 1. Rights to or interests in life policies are specified investments under Article 89 of the Regulated Activities Order, but rights to or interests in general insurance contracts are not.
CONC App 1.4.7RRP
A statement of high net worth for the purposes of articles 60H(d) and 60Q(c) of the Regulated Activities Order must have the following form and content:“Statement of High Net Worth(articles 60H(1) and 60Q of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001)(articles 60H and 60Q of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001)I/We* (insert full name) .............................................................. of (insert
PERG 5.7.1GRP
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
PERG 8.31.5GRP
Certain of the exclusions in the Regulated Activities Order that apply to the regulated activity of advising on investments are not available where the advice either relates to a contract of insurance or amounts to insurance mediation or reinsurance mediation. This results from the requirements of the Insurance Mediation Directive and is explained in more detail in PERG 5 (Insurance mediation activities).
PERG 8.33.6GRP
The exclusions in Articles 29 and 33 of the Regulated Activities Order are not available where the investment is a contract of insurance. However, certain other exclusions do apply. This results from implementation of the requirements of the Insurance Mediation Directive and is explained in more detail in PERG 5.6 (The regulated activities: arranging deals in, and making arrangements with a view to transactions in, contracts of insurance).
PERG 8.29.7GRP

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.