Related provisions for PERG 8.29.6

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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 2.7.17GRP
Certain activities carried on in connection with business at Lloyds will be regulated. In addition to those already mentioned (arranging deals in the underwriting capacity of a Lloyd's syndicate or membership of a Lloyd'ssyndicate), there are three other regulated activities as follows.(1) Managing the underwriting capacity of a Lloyd's syndicate as a managing agent at Lloyd's is a regulated activity. 'Managing agent' is defined in article 3(1) of the Regulated Activities Order.(2)
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 5.6.19GRP
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 8.32.1GRP
Under article 25 of the Regulated Activities Order, arranging deals in investments covers:(1) making arrangements for another person (whether as principal or agent) to buy, sell, subscribe for or underwrite a particular investment which is:(a) a security; or(b) a relevant investment; or(c) an investment of the kind specified by article 86, or article 89 so far as relevant to that article (Lloyd’s syndicate membership and capacity and rights to or interests in such investments);
PERG 8.32.3GRP
In the course of their business, people such as publishers or broadcasters, Internet service providers, website operators or telephone marketing companies may provide services for authorised or exempt persons or other persons (such as overseas persons) who carry on regulated activities. This does not necessarily mean that any arrangements they make with such persons will fall within the scope of article 25(2). For that to be the case, the arrangements must be made with a view
PERG 8.32.4GRP
The ordinary business of a publisher or broadcaster can involve him in publishing or broadcasting financial promotions (for example, advertisements) on behalf of authorised or exempt persons. Journalists who write about investments or financial services may promote the services of an authorised or exempt person. In the FCA's opinion, such persons would not normally be regarded as making arrangements under article 25(2). This is the case even if any arrangements they may have made
PERG 8.32.10GRP
Companies providing telephone marketing and related services to investment firms will face similar issues. If their services are entirely passive – for example, answering telephone calls, sending out literature upon request or referring enquirers to representatives of their client – they may simply be regarded as making arrangements with a view to their providing telephone answering services. On the other hand, where a telephone marketing company:(1) makes proactive calls to prospective
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 2.6.20GRP
The specified investment category of options comprises:444(1) 4options to acquire or dispose of securities or contractually based investments, currency and certain precious metals and options to acquire or dispose of such options. Options to buy or sell other types of commodity will only fall within this specified investment category if they are options to buy or sellfutures, or options to buy or sellcontracts for differences, which are based on other commodities. But options
PERG 7.3.1GRP
Under article 53(1)6 of the Regulated Activities Order (Advising on investments), advising a person is a specified kind of activity if:(1) the advice is given to the 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) it is advice on the merits of his doing any of the following (whether as principal or agent):(a) buying, selling, subscribing for or underwriting a particular investment which is
PERG 7.3.7GRP
But even if advice is given in the United Kingdom, the general prohibition will not be contravened if the giving of advice does not amount to the carrying on, in the United Kingdom, of the business of advising on investments, advising on regulated credit agreements for the acquisition of land4 or advising on a home finance transaction1. Also, the general prohibition will not be contravened if the exclusion for overseas persons in article 72 of the Regulated Activities Order (Overseas
PERG 7.3.8GRP
If a person is carrying on the business of advising on investments, advising on regulated credit agreements for the acquisition of land4 or advising on a home finance transaction1in the United Kingdom, he will not require authorisation if:(1) he is able to rely on an exclusion; in addition to the exclusions already mentioned (in articles 54 and 72 of the Regulated Activities Order), other exclusions that may be relevant are in Chapter XVII of Part II of the Regulated Activities
PERG 8.14.21GRP
This exemption disapplies the restriction in section 21 of the Act from non-real time financial promotions or solicited real time financial promotions which are made to a person who the communicator believes on reasonable grounds to be a certified high net worth individual and which relate to certain investments. These investments must be either:7(1) shares in or debentures or alternative debentures7 of an unlisted company; or(2) warrants,certificates representing certain securities,
SUP App 3.9.2GRP
The tables provide a general indication of the investments and activities specified in the Regulated Activities Order that may correspond to categories provided for in the CRD6, 1MiFID3, AIFMD7, the UCITS Directive, the MCD9 or the Insurance Mediation Directive1. The tables do not provide definitive guidance as to whether a firm is carrying on an activity that is capable of being passported, nor do the tables take account of exceptions that remove the effect of articles. Whether
SUP App 3.9.4GRP

1

Table 1: CRD activities6

6

Part II RAO Activities

Part III RAO Investments

1.

Taking6 deposits and other repayable funds from the public

6

Article 5

Article 74

2.

Lending

Article 61, 64

Article 88

3.

Financial leasing

4.

Money transmission services

5.

Issuing and administering means of payment (eg credit cards, travellers' cheques and bankers' drafts)

6.

Guarantees and commitments

7.

Trading for own account or for account of customers in:

(a) money market instruments

(b) foreign exchange

(c) financial futures and options

(d) exchange and interest rate instruments

(e) transferable securities

Article 14, 21, 25 (see Note 1), 64

Article 14, 21, 25, 64

Article 14, 21, 25, 64

Article 14, 21, 25, 64

Article 14, 21, 25, 64

Article 77, 78, 80, 83-85, 89

Article 83-85, 89

Article 83-85, 89

Article 83-85, 89

Article 76-81, 89

8.

Participation in share issues and the provision of services relating to such issues

Article 14, 21, 25, 53(1)10, 64

Article 76-81, 89

9.

Advice to undertakings on capital structure, industrial strategy and related questions and advice and services relating to mergers and the purchase of undertakings

Article 14, 21, 25, 53(1)10, 64

Article 76-80, 83-85, 89

10.

Money broking

Article 25, 64

Article 77, 78, 89

11.

Portfolio management and advice

Article 14, 21, 25, 37, 53(1)10, 64

Article 76-81, 83-85, 89

12.

Safekeeping and administration of securities

Article 40, 45, 64

Article 76-81, 83-85, 89

13.

Credit reference services

14.

Safe custody services

 1 16

615.

Issuing electric money

Article 9B

Article 74A

3Note 12: The services and activities provided for in Sections A and B of Annex I of MiFID when referring to the financial instruments provided for in Section C of Annex I of that Directive are subject to mutual recognition according to the CRD from 1 January 2013.6See2 the table at SUP App 3.9.5 G below for mapping of MiFIDinvestment services and activities.For further details relating to this residual category, please see the "CRD"6section of the passporting forms entitled "Notification of intention to establish a branch in another EEA State" and "Notification of intention to provide cross border services in another EEA State".2

266
SUP App 3.9.5AGRP

Table 2ZA: AIFMD activities

Part II RAO Activities

Part III RAO Investments

1.

AIFM management functions.

Article 51ZC

N/A (activity relates to property of any kind)

2.

Management of portfolios of investments, including those owned by pension funds and institutions for occupational retirement in accordance with article 19(1) of Directive 2003/41/EC, in accordance with mandates given by investors on a discretionary client-by-client basis (Note 2).

Articles 14, 21, 25, 37, 40 (arranging only), 64

Articles 76 to 81, 83 to 85, 89

3.

Investment advice (Note 2).

Articles 53(1)10, 64

Articles 76 to 81, 83 to 85, 89

4.

Safe-keeping and administration in relation to shares or units of collective investment undertakings.

Articles 40, 45, 64

Articles 76 to 81, 83 to 85, 89

5.

Reception and transmission or orders in relation to financial instruments.

Articles 25(1), 64

Articles 76 to 81, 83 to 85, 89

Note 1. See FUND 1.4.2 R to FUND 1.4.4 R for further information in relation to the activities that full-scope UK AIFMs are able to perform.

Note 2. See FUND 1.4.5 G for the position with respect to assets which are not financial instruments.
SUP App 3.9.6GRP

Table 2A: UCITS Directive activities

Part II RAO Activities

Part III RAO Investments

1.

The management of UCITS in the form of unit trusts / common funds or of investment companies; this includes the function mentioned in Annex II of the UCITS Directive (see Note 2).

Article 51ZA8

8

N/A (activity relates to property of any kind) (Note 3)8

88

2.

Managing portfolios of investments, including those owned by pension funds, in accordance with mandates given by investors on a discretionary, client-by-client basis, where such portfolios include one or more of the instruments listed in Section C 3of Annex I 3to MiFID3.

33

Articles 14, 21, 25, 37, 40 (arranging only),8 64

8

Articles 76-81, 83-85, 89

3.

Investment advice concerning one or more of the instruments listed in Section C3of Annex I 3to MiFID3.

3

Articles 53(1)10, 64

Articles 76-81, 83-85, 89

4.

Safekeeping and administration services in relation to units of collective investment undertakings.

Articles 40, 45, 64

Articles 76-81, 83-85, 89

Note 1. A UCITS management company can only be authorised to carry on the non-core services set out in rows (3) and (4) of Table 2A if it is also authorised to carry on the activity set out in row (2) of the table (see COLL 6.9.9 R)8.

338

Note 2. The functions set out in Annex 2 to the UCITS Directive are:

1.

Investment management.

2.

Administration:

a.

legal and fund management accounting services;

b.

customer inquiries;

c.

valuation and pricing (including tax returns);

d.

regulatory compliance monitoring;

e.

maintenance of unit-holder register;

f.

distribution of income;

g.

unit issues and redemptions;

h.

contract settlements (including certificate dispatch);

i.

record keeping.

3.

Marketing.

8Note 3. The regulated activity of managing a UCITS may be carried on for property of any kind (article 4(2) of the regulated activities order). However, the scheme property of a UCITS scheme is limited to certain types of property, in line with COLL 5 (Investment and borrowing powers).

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(1)10 and 64

Articles 75, 89 (see Note 1)

2.

Concluding contracts of insurance

Articles 21, 25, 53(1)10 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.
SUP App 3.9.8GRP

Table 3: MCD activities

Part II RAO specified activities

Part III RAO Investments

1

Acting as credit intermediary

Articles 25A(1), 25A11(2A), 53A, 36A(1)(d), (e), (f) and 53DA

Articles 88 and 88D
PERG 8.4.31GRP
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
PERG 8.4.32GRP
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
PERG 8.4.34GRP
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
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 8.29.3GRP
Neither does advice on the merits of using a particular stockbroker or investment manager in his capacity as such amount to advice for the purpose of article 53(1)3. This is because it is not advice on the merits of buying or selling an investment.
PERG 8.29.5GRP
Without an explicit or implicit recommendation on the merits of buying or selling an investment, advice will not be covered by article 53(1)3 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,
PERG 8.29.7GRP

1Typical recommendations and whether they will be regulated as advising on investments (except P2P agreements)3 under article 53(1)3 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(1)3 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.
PERG 4.5.18GRP
In addition to the exclusion in article 33A, introducers may be able to take advantage of the exclusion in article 33 of the Regulated Activities Order (Introducing). This excludes arrangements where:(1) they are arrangements under which persons will be introduced to another person;(2) the person to whom the introduction is 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
PERG 8.27.1GRP
For the purposes of article 53(1)1, 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.
PERG 8.27.4GRP
Article 53(1)1 does apply where the recipient is someone who invests on behalf of other persons (whether as a principal or agent), such as:(1) a trustee or nominee; or(2) a discretionary fund manager; or(3) an attorney or anyone else who enters into investment transactions as agent for investors;where he receives the advice in that capacity.
PERG 5.11.9GRP
Article 67 excludes from the activities of dealing 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 which:(1) is carried on in the course of carrying on any profession or business which does not otherwise consist of the carrying on of regulated activities in the United Kingdom; and(2) may
PERG 8.30.1GRP
With the exception of periodicals, broadcasts and other news or information services (see PERG 8.31.2 G), the medium used to give advice should make no difference to whether or not it is caught by article 53(1)1.
PERG 8.30.5GRP
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(1)1 (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
PERG 8.33.4GRP
Of potentially greater significance is the exclusion in article 33 of the Regulated Activities Order which excludes arrangements 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
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 8.31.2GRP
As respects article 53(1)2, the main exclusion relates to advice given in periodical publications, regularly updated news and information services and broadcasts (article 54: Advice given in newspapers etc). The exclusion applies if the principal purpose of any of these is not to give advice covered in article 53(1)2 or to lead or enable persons to acquire or dispose of securities or contractually based investments. This is explained in greater detail, together with the provisions
SUP App 3.10.2GRP

This is a guide only and should not be used as a substitute for legal advice

in individual cases.

Table 3: Solvency II Directive activities7

7

Part II RAO Activities

Part III RAO Investments

1. Non-life insurance activities

1.

Taking up and carrying on direct non-life insurance business

Article 10

Article 75

2.

Classes 1 to 18 of non-life insurance business in Point A of Annex I to the Solvency II7 Directive

77

Corresponding paragraphs 1 to 18 of Schedule 1, Part I

2. Life insurance activities7

7

1.

Taking up and carrying on direct life insurance business

Article 10

Article 75

2.

Classes I to IX of direct life insurance business in Annex II to the Solvency II Directive7

7

Corresponding paragraphs I to IX of Schedule 1, Part II
PERG 2.8.4GRP
The regulated activity of dealing in investments as principal applies to specified transactions relating to any security or to any contractually based investment (apart from rights under funeral plan contracts or rights to or interests in such contracts). The activity is cut back by exclusions as follows.(1) Of particular significance is the exclusion in article 15 of the Regulated Activities Order (Absence of holding out etc). This applies where dealing in investments as principal