Related provisions for PERG 4.5.7A
1 - 20 of 164 items.
Because of the different nature of the specified investments in relation to which these activities are carried on, 'buying' and 'selling' are defined terms that have an extended meaning. For example, some of the specified investments listed in PERG 2.6 are particular things that can be bought and sold in the ordinary meaning of the words. Others fall outside the ordinary meaning of 'buy' and 'sell' because their transfer involves an assumption of a potential liability under a
36The RAO and the UK auctioning regulations together generate three broad categories of person in relation to bidding for emission allowances on an auction platform:(1) The first category consists of a MiFID investment firm (other than a collective portfolio management investment firm) or a third country investment firm (other than one which would be a collective portfolio management investment firm if its head office were in the United Kingdom)38.(1A) The first category also
11(1) 36As explained in PERG 2.6.19DG, an emission allowance and an emissions auction product are both specified investments. The Regulated Activities Order deals with this as follows.3326(2) 36A person in the first category in PERG 2.7.6BG requires permission from the FCA for bidding in emissions auctions but does not require any other permission to do so.3326(3) 36A person in the second category in PERG 2.7.6BG does not require any permission from the FCA for bidding.3326(4)
There are ten93 arranging activities that are regulated activities under the Regulated Activities Order. These are:39(1) arranging (bringing about) deals in investments which are securities, relevant investments, structured deposits26 or the underwriting capacity of a Lloyd's syndicate or membership of a Lloyd's syndicate (article 25(1));(2) making arrangements with a view to transactions in investments which are securities, relevant investments, structured deposits26 or the underwriting
The activity of arranging (bringing about) deals in investments is aimed at arrangements that would have the direct effect that a particular transaction is concluded (that is, arrangements that bring it about). The activity of making arrangements with a view to transactions in investments is concerned with arrangements of an ongoing nature whose purpose is to facilitate the entering into of transactions by other parties. This activity has a potentially broad scope and typically
(1) 8The scope of article 25(2) of the Regulated Activities Order (the subject of PERG 2.7.7B G) was considered by the High Court in the case of Watersheds Limited v. David Da Costa and Paul Gentlemen. The judgement suggests that the activity of introducing does not itself constitute a regulated activity for the purposes of article 25(2) of the Regulated Activities Order. The FCA has considered whether the judgement necessitates any change to the views expressed in PERG 2.7.7B
8In determining whether particular arrangements fall within the scope of Article 25(2) of the Regulated Activities Order, it may be necessary to consider the purpose of the arrangements. Further guidance on this can be found in PERG 8.32.3G. Although this guidance is in relation to the activities of publishers, broadcasters, website operators and telephone marketing services, the principle is not limited to those activities.
(1) 15Taking steps to procure the payment of a debt due under a credit agreement or a consumer hire agreement is a regulated activity.(2) Taking steps to procure the payment of a debt due under an article 36H agreement (see PERG 2.7.7HG (3)) which has been entered into with the facilitation of an operator of an electronic system in relation to lending is also a regulated activity.(3) The activity is not a regulated activity in so far as the activity is operating an electronic
(1) 15Taking steps to perform duties or to exercise or to enforce rights under a credit agreement or a consumer hire agreement on behalf of the lender or owner is a regulated activity.(2) Taking steps to perform duties or to exercise or to enforce rights under an article 36H agreement (see PERG 2.7.7HG (3)) which has been entered into with the facilitation of an operator of an electronic system in relation to lending is also a regulated activity.(3) In so far as the activity is
25There are two regulated activities which constitute advising on investments in article 53 of the Regulated Activities Order. These are:(1) advising on investments (except P2P agreements) (in article 53(1) of the Regulated Activities Order); and(2) advising on P2P agreements (in article 53(2) of the Regulated Activities Order).
The regulated activity of advising on investments (except P2P agreements)25 under article 53(1)25 of the Regulated Activities Order applies to advice on securities, structured deposits26 or relevant investments. It does not, for example, include giving advice about deposits (except structured deposits)26, or about things that are not specified investments for the purposes of the Regulated Activities Order. 19 Giving advice on certain other specified investments is, however, regulated
25The regulated activity of advising on P2P agreements under article 53(2) of the Regulated Activities Order applies to advice given to a person in their capacity as a lender or potential lender under a relevant article 36H agreement (defined in article 53(4) of the Regulated Activities Order), or as an agent for a lender or potential lender under such an agreement, where that advice is on the merits of their doing any of the following (whether as principal or agent):(1) entering
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,
3Under article 53B of the Regulated Activities Order, giving advice to a person in his capacity as reversion occupier or reversion provider is a regulated activity if it is advice on the merits of the person:(1) entering into a particular home reversion plan; or(2) varying the terms of a home reversion plan.Advice on varying terms as referred to in (2) only comes within article 53B where the plan was entered into by the person on or after 6 April 2007 and the variation varies
3Under article 53C of the Regulated Activities Order, giving advice to a person in his capacity as home purchaser is a regulated activity if it is advice on the merits of the person:(1) entering into a particular home purchase plan; or(2) varying the terms of a home purchase plan.Advice on varying terms as referred to in (2) only comes within article 53C where the plan is entered into by the person on or after 6 April 2007 and the variation varies the person's obligations under
9Under article 53D of the Regulated Activities Order giving advice to a person in his capacity as an SRB agreement seller or an SRB agreement provider is a regulated activity if it is advice on the merits of the person:(1) entering into a particular regulated sale and rent back agreement; or(2) varying the terms of a regulated sale and rent back agreement. Advice on varying terms as referred to in (2) only comes within article 53D where the agreement is entered into by the person
18Under article 53DA of the Regulated Activities Order, advising a person (“P”) is a regulated activity if:19(1) the advice is given to P in P’s capacity as a recipient of credit, or potential recipient of credit, under a regulated credit agreement;(2) P intends to use the credit to acquire or retain property rights in land or in an existing or projected building; and(3) the advice consists of the provision of personal recommendations to P in respect of one or more transactions
19Under article 53E of the Regulated Activities Order giving advice to a person (“P”) who has subsisting rights in respect of any safeguarded benefits in their capacity as: (1) a member of a pension scheme; or(2) a survivor of a member of a pension scheme;is a regulated activity if the advice is on the merits of P requiring the trustee or manager of the pension scheme to carry out any of the transactions listed in 29PERG 2.7.16HG.29
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)
(1) A credit agreement entered into before 1 April 2014 is a regulated credit agreement for the purposes of PERG 2.7.19AG if it was a ‘regulated agreement’ within the meaning of the CCA when it was entered into, or became such a ‘regulated agreement’ by virtue of being varied or supplemented by another agreement before 1 April 2014. But a credit agreement is not a regulated credit agreement for the purposes of PERG 2.7.19AG if was entered into before 1 April 2014 and, if it had
15A credit agreement is an exempt agreement17 in the following cases:(1) if:42(a) by entering into the agreement as lender, a person is or was carrying on the regulated activity of entering into regulated mortgage contracts; or42(b) by entering into the agreement as home purchase provider, a person is or was carrying on a regulated activity of the kind specified by article 63F(1) of the Regulated Activities Order (entering into regulated home purchase plans); or42(c) by administering
(1) 42In PERG 2.7.19FG(3), ‘housing authority’ has the same meaning as in article 60E(7) of the Regulated Activities Order. The definition of ‘housing authority’ in article 60E includes housing associations registered under the relevant housing legislation. (2) The effect of the definition of ‘regulated credit agreement’ in the Regulated Activities Order is that credit agreements entered into by housing associations and other housing authorities before 1 April 2014 that were
Entering into as lender, and administering, a regulated mortgage contract are regulated activities under article 61 of the Regulated Activities Order (Regulated mortgage contracts). Guidance on these regulated activities is in PERG 4.7 (Entering into a regulated mortgage contract) and PERG 4.8 (Administering a regulated mortgage contract).
3Entering into a home reversion plan and administering a home reversion plan are regulated activities under article 63B of the Regulated Activities Order (Regulated home reversion plans). Guidance on these regulated activities is in PERG 14.3 (Guidance on home reversion and home purchase activities).
9Entering into a regulated sale and rent back agreement as an agreement provider and administering a regulated sale and rent back agreement are regulated activities under Article 63J of the Regulated Activities Order (Regulated sale and rent back agreements). Guidance on these regulated activities is in PERG 14.4A (Activities relating to regulated sale and rent back agreements).
Certain transactions are excluded. The definition of deposit itself excludes money paid in connection with certain transactions such as advance payments for the provision of goods or services and sums paid to secure the performance of a contract. The circumstances in which payments are excluded from the definition itself are exhaustively stated in article 5(3) of the Regulated Activities Order (Accepting deposits). In addition, there is a separate exclusion in article 9 of the
Electronic money is specified as an investment in article 74A of the Regulated Activities Order, but only when issued by:77(1) a full credit institution, a credit union or a municipal bank; or(2) a person deemed to have been granted authorisation under regulation 74 of the Electronic Money Regulations; or a person who falls within regulation 76(1) of the Electronic Money Regulations (see PERG 3A, Q30 and 31).The authorisation and registration requirements for any other person
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)).
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
Shares are defined in the Regulated Activities Order as shares or stock in a wide range of entities; that is, any body corporate wherever incorporated and unincorporated bodies formed under the law of a country other than the United Kingdom. They include deferred shares issued by building societies as well as transferable shares in industrial and provident societies, credit unions and equivalent EEA bodies. These shares are transferable and negotiable in a way similar to other
Two categories of specified investments relating to debt instruments are dealt with under this heading. They broadly split into private debt and public sector debt.(1) The first category of 'instruments creating or acknowledging indebtedness' (defined in article 77 of the Regulated Activities Order and referred to in the Handbook as debentures) expressly refers to a range of instruments such as debentures, bonds and loan stock and contains a catch-all reference to 'any other instrument
6Alternative finance investment bonds (defined in article 77A of the Regulated Activities Order and referred to in the Handbook as alternative debentures) are a form of Sharia compliant bond (known as sukuk in the plural or sakk in the singular) which are intended to be regulated in an equivalent manner to conventional debt securities, where appropriate. Sukuk arrangements allow assets to be held for the benefit of investors in certificates issued by a company. The benefits
The arrangements which grant rights under alternative debentures are similar to the tax definition of arrangements relating to alternative finance investment bonds at section 48A of the Finance Act 2005 (see www.opsi.gov.uk/acts/acts2007/ukpga_20070011_en_5#pt3-pb9-l1g53). However the purposes of the two provisions are not the same. One of the objectives of the FCA under the Act is consumer protection. Accordingly, secondary legislation made under the Act, like article 77A
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
There are no exclusions in the Regulated Activities Order for this specified investment category. This is because 'collective investment scheme' is defined in section 235 of the Act (Collective investment schemes) for the purposes of the Act generally. But there is a separate power to provide for exemptions from that definition and the Treasury have exercised it (see the Financial Services and Markets Act 2000 (Collective Investment Schemes) Order 2001 (SI 2001/1062). The result
213(1) Rights under stakeholder pension schemes and personal pension schemes are specified investments for the purposes of the entire Regulated Activities Order.13(2) Rights or interests under a pension scheme which provides safeguarded benefits as defined by section 48(8) of the Pension Schemes Act 2015 are only specified investments for the purposes of article 53E (Advising on conversion or transfer of pension benefits) and not in relation to any other regulated activity.13(3)
20Some other points about emission allowances are:91618(1) Emission allowance16 means an allowance as defined in article 3(a) of Directive 2003/87/EC or created under article 18 of the trading scheme order 2020. These provisions provide20 that an allowance is an allowance to emit one tonne of carbon dioxide equivalent during a specified period, only valid for the purpose of meeting the requirements of Directive 2003/87/EC or the trading scheme order 202020 and only transferable
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
The key issue in determining whether something is an investment in this category for the purposes of the Regulated Activities Order is whether the contract is made for investment purposes rather than commercial purposes. Contracts which are made for commercial purposes are excluded from this specified investment category and the Regulated Activities Order contains several tests as to when that is, or is not, the case (some are conclusive, others only indicative).
4As with options, there is an additional category of instruments which are futures only in limited circumstances16. These are contracts as described in PERG 2.6.21 G:(1) that would not be regarded as having been entered into for investment purposes because they fail one of the tests mentioned in PERG 2.6.22 G;(2) that:16(a) fall within paragraph 4 of Part 1 of Schedule 2 to the Regulated Activities Order18 and relate to currencies (see PERG 13, Q31A to Q31S for guidance about
In accordance with article 61(3)(a) of the Regulated Activities Order, a regulated mortgage contract is a contract which, at the time it is entered into, satisfies the following conditions:(1) the contract is one where the lender provides credit to an individual or trustees (the "borrower");(2) the obligation of the borrower to repay is secured by a mortgage on land:181212(a) in relation to a contract entered into before IP completion day19, means land in the United Kingdom or,
3In accordance with article 63B(3)(a) of the Regulated Activities Order, a home reversion plan is an arrangement under which, at the time it is entered into:(1) a person (the "reversion purchaser") buys all or part of a qualifying interest in land (other than timeshare accommodation) in the United Kingdom from an individual or trustees (the "reversion occupier");(2) the reversion occupier (or, where trustees are concerned, an individual who is a beneficiary of the trust), or a
3In accordance with article 63F(3)(a) of the Regulated Activities Order, a home purchase plan is an arrangement under which, at the time it is entered into:(1) a person (the "home purchase provider") buys a qualifying interest in land or an undivided share of a qualifying interest in land (other than timeshare accommodation) in the United Kingdom;(2) where an undivided share of a qualifying interest is bought, the interest is held on trust for the home purchase provider and the
5In accordance with Article 63J(3)(a) of the Regulated Activities Order, a regulated sale and rent back agreement is an arrangement under which, at the time it is entered into:(1) a person (the SRB agreement provider) buys all or part of the qualifying interest in land (other than timeshare accommodation) in the United Kingdom from an individual or trustees (the agreement seller); and(2) the agreement seller (if he is an individual) or an individual who is the beneficiary of the
11In accordance with article 60B (3) of the Regulated Activities Order, a credit agreement is an agreement between an individual ("A") and any other person ("B") under which B provides A with credit of any amount. In accordance with article 36H (10) of the Regulated Activities Order, rights under an article 36H agreement are also specified investments. The definition of an article 36H agreement is set out in PERG 2.7.7H G. In addition and in accordance with article 53(5) of the
11In accordance with article 60N(3) of the Regulated Activities Order, a consumer hire agreement is an agreement between a person ("the owner") and an individual ("the hirer") for the bailment or, in Scotland, the hiring, of goods to the hirer which:(1) is not a hire-purchase agreement; and(2) is capable of subsisting for more than three months.
Article 25A of the Regulated Activities Order describes two types of regulated activities concerned with arrangingregulated mortgage contracts. These are:(1) making arrangements:2(a) for another person to2 enter into a regulated mortgage contract as borrower; or(b) to enter into a regulated mortgage contract with a borrower on behalf of a lender; or22(c) for another person to vary the terms of a regulated mortgage contract entered into by that person3 as borrower on or after 31
The first activity (article 25A(1) and (2A)2) 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). As explained in PERG 4.5.4A G, this
The second activity (article 25A(2)) is referred to in this guidance as making arrangements with a view to regulated mortgage contracts. This activity is different from article 25A(1) and (2A)2) because it requires a potential borrower to actively participate by utilising the arrangements to enter into a regulated mortgage contract. It does not require that the arrangements would bring about a regulated mortgage contract. Nor does it cover arrangements leading to contract variations.
Article 26 of the Regulated Activities Order (Arrangements not causing a deal) excludes from article 25A(1) arrangements which do not bring about or would not bring about the regulated mortgage contract in question. In the FCA's view, a person brings about or would bring about a regulated mortgage contract if his involvement in the chain of events leading to the transaction is of enough importance that without that involvement it would not take place.
Article 27 of the Regulated Activities Order (Enabling parties to communicate) contains an exclusion that applies to arrangements which might otherwise fall within article 25A(2) merely because they provide the means by which one party to a regulated mortgage contract (or potential regulated mortgage contract) is able to communicate with other parties. Simply providing the means by which parties to a regulated mortgage contract (or potential regulated mortgage contract) are able
In the FCA's view, the crucial element of the exclusion in article 27 is the inclusion of the word "merely". When a publisher, broadcaster or Internet website operator goes beyond what is necessary for him to provide his service of publishing, broadcasting or otherwise facilitating the issue of promotions, he may well bring himself within the scope of article 25A(2). Further detailed guidance relating to the scope of the exclusion in article 27 is contained in PERG 8.32.6 G to
Arranging a regulated mortgage contract (or contract variation) to which the arranger is to be a party is excluded from both article 25A(1) and (2) by article 28A of the Regulated Activities Order (Arranging contracts to which the arranger is a party). As a result, a person cannot both be entering into a regulated mortgage contract and arranging a regulated mortgage contract under article 25A as regards a particular regulated mortgage contract. This means that a direct sale by
An unauthorised person who makes arrangements for or with a view to a regulated mortgage contract between a borrower and an authorised person, is excluded from article 25A(1) and (2), 25A(2A) and2 by article 29 of the Regulated Activities Order (Arranging deals with or through authorised persons) if specified conditions as to advice and remuneration are satisfied. For example, the exclusion is dependent on the borrower not receiving any advice on the regulated mortgage contract
Article 29A of the Regulated Activities Order excludes from article 25A(1)(b) (which covers making arrangements for another person to vary the terms of a regulated mortgage contract) certain activities of an unauthorised person who is taking advantage of the exclusion from administering a regulated mortgage contract in article 62 (Exclusion: arranging administration by authorised persons) see PERG 4.8.4 G).
Article 33A of the Regulated Activities Order (Introducing to authorised persons) excludes from article 25A(2) arrangements under which a borrower is introduced to certain persons. Introducing is only a regulated activity under article 25A(2) as it does not of itself bring about regulated mortgage contracts (see PERG 4.5.2 G).
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 Financial Services Register1 at http://www.fsa.gov.uk/register/;11(2) an
The exclusion in article 33A only applies when the introducer satisfies two conditions:(1) he does not receive any money paid by the borrower in connection with any transaction that the borrower enters into with or through the person to whom the borrower is introduced as a result of the introduction, other than money payable to him on his own account; and(2) before making the introduction he discloses to the borrower all relevant information described in PERG 4.5.14 G.
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
The Regulated Activities Order contains a number of other exclusions which have the effect of preventing certain activities from amounting to regulated activities within article 25. These are referred to in PERG 4.10 (Exclusions applying to more than one regulated activity). There is also an exclusion where both the arranger and borrower are overseas, which is referred to in PERG 4.11 (Link between activities and the United Kingdom).
Article 4(4B) of the Regulated Activities Order says that certain exclusions in the Regulated Activities Order do not apply in certain cases; briefly, those are cases which were covered by the MCD as it applied to the United Kingdom before IP completion day4, and the effect of the legislation which refers to those cases has been preserved. This section explains the situations in which this applies. References in this section to agreements or activities covered by, regulated under
Article 4(4B) of the Regulated Activities Order says that where:(1) a person is: (a) a mortgage creditor (see PERG 4.10A.6 G); or(b) a credit intermediary (see PERG 4.10A.12 G); or (c) a person providing advisory services (see PERG 4.10A.20 G);under the MCD; and(2) that person is (ignoring the exclusions in (3)) carrying on one of the following regulated activities:(a) article 25A (arranging (bringing about) regulated mortgage contracts and making arrangements with a view to regulated
Article 4(4B) of the Regulated Activities Order only applies if the regulated mortgage contract is covered by the MCD. A regulated mortgage contract is covered if: (1) the lender is acting in the course of his trade, business or profession; and(2) the borrower is an individual; and(3) the borrower is acting for purposes which are outside their trade, business or profession; and(4) the regulated mortgage contract does not come within one of the exclusions summarised in PERG 4.10A.5
Therefore, article 4(4B) means that the Regulated Activities Order exclusions in PERG 4.10A.2G (3) do not apply to entering into a regulated mortgage contract as lender unless: (1) the regulated mortgage contract falls outside the MCD (see PERG 4.10A.5 G); or(2) the lender is not acting in the course of his trade, business or profession.
Where advising on regulated mortgage contracts falls within the MCD, the Regulated Activities Order exclusions in PERG 4.10A.2G (3) do not apply to this activity. Advisers should note that: (1) if the adviser does not act for remuneration, the MCD does not apply; (2) the MCD does not cover the regulated mortgage contracts listed in PERG 4.10A.5 G; (3) the MCD only applies to advisory services provided to consumers;(4) the MCD only applies to personal recommendations.
Article 4(4B) does not apply to advising or arranging activities if: (1) they are carried out on an incidental basis in the course of professional activity;(2) that professional activity is regulated; and(3) the rules governing that professional activity do not prohibit the carrying out, on an incidental basis, of credit intermediation activities.
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)).
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
Article 25(2) may, for instance, include activities of persons who help potential policyholders fill in or check application forms in the context of ongoing arrangements between these persons and insurance undertakings. A further example of this activity would be a person introducing customers to an intermediary either for advice or to help arrange an insurance policy. The introduction might be oral or written. By contrast, the FCA considers that a mere passive display of literature
Article 72C of the1Regulated Activities Order provides another1 potential exclusion in relation to article 251, however, only1 for persons whose principal business is other than insurance distribution activities. In contrast to article 33B, article 72C also provides an exclusion for regulated activities other than arranging1.
In broad terms, article 72C of the Regulated Activities Order excludes from the activities of arranging and assisting in the administration and performance of a contract of insurance activities that:(1) consist of the provision of information to the policyholder or potential policyholder;(2) are carried on by a person carrying on any profession or business which does not otherwise consist of regulated activities; and(3) amount to the provision of information that may reasonably
This exclusion applies to a person whose profession or business does not otherwise consist of 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 consists of regulated activities. This is provided that the main focus of the profession or business does not involve regulated activities and that the regulated activities
Article 27 of the Regulated Activities Order (Enabling parties to communicate) contains an exclusion that applies to arrangements which might otherwise bring within article 25(2) those who merely provide the means by which one party to a transaction (or potential transaction) is able to communicate with other parties. Simply providing the means by which parties to a transaction (or potential transaction) are able to communicate with each other is excluded from article 25(2) only.
In the FCA's view, the crucial element of the exclusion in article 27 is the inclusion of the word 'merely'. When a publisher, broadcaster or internet website operator goes beyond what is necessary for him1 to provide its1 service of publishing, broadcasting or otherwise facilitating the issue of promotions, it may well bring itself1 within the scope of article 25(2). Further detailed guidance relating to the scope of the exclusion in article 27 is contained in PERG 2.8.6G (2)
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.
Market makers in traded endowment policies may be able to rely on this exclusion to avoid the need to be authorised. They must ensure, however, that where they are carrying on the regulated activity of dealing in investments as principal (article 14) they are also able to rely on the exclusions in articles 15 or 16 (see the guidance in PERG 2.8.4 G (Dealing in investments as principal)).
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
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 they are1 exempt; or(c) a person who is not unlawfully carrying on regulated
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 usually the case if1 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,
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
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
The Regulated Activities Order contains some other exclusions which have the effect of narrowing or limiting the application of regulated activities within article 25 by preventing certain activities from amounting to regulated activities. These are referred to in PERG 5.11.8 G (Exclusions applying to more than one regulated activity).
The5 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 to which the arranger is to be a party, where the arranger enters into or is to enter into the transaction:(a) as agent for another person; or(b) as principal, unless the arranger is the only
(1) The5 exclusion for groups and joint enterprises in article 69 of the Regulated Activities Order (Groups and joint enterprises) does not apply to transactions relating to contracts of insurance. This will affect5 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
Article 4(4A) of the Regulated Activities Order (Specified activities: general) disapplies certain exclusions where a person, for remuneration, takes up or pursues insurance distribution or reinsurance distribution5 (as defined in articles 2.1(1), 2.1(2) and 2.2 of the IDD5) and PERG 5.16.2G5) in relation to a risk or commitment located in the United Kingdom. In relation to a contract of insurance entered into before IP completion day, article 4(4A) applies in relation to a risk
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
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
Although the article 67 exclusion is disapplied (by article 4(4A) of the Regulated Activities Order (Specified investments: general)) when a person takes up or pursues insurance distribution or reinsurance distribution5 as defined by articles 2.1(1), 2.1(2) and 2.2 of the IDD5, there may be cases where a person is not carrying on activities that amount to insurance distribution5. For example, where a person's activities amount simply to the provision of information on an incidental
Article 67 may also apply to activities relating to assignments of insurance policies, as, in the FCA'sview, article 2.1(1) of the IDD5 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
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 services5 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
Article 72D (Large risks contracts where risk situated outside the EEA) provides an exclusion for large risks situated outside the EEA. Broadly speaking, these are risks relating to:(1) railway rolling stock, aircraft, ships, goods in transit, aircraft liability and shipping liability;(2) credit and suretyship where relating to the policyholder's commercial or professional liability;(3) land vehicles, fire and natural forces, property damage, motor vehicle liability where the
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.
3Article 72H (Insolvency Practitioners) 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 person acting as an insolvency practitioner.
Under article 25 of the Regulated Activities Order, arranging deals in investments covers:(1) making arrangements1 for another person (whether as principal or agent) to buy, sell, subscribe for or underwrite a particular investment which is:(a) a security or a structured deposit1; 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
Article 25(1) applies only where the arrangements bring about or would bring about the particular transaction in question. This is because of the exclusion in article 26. In the FCA's view, a person brings about or would bring about a transaction only if his involvement in the chain of events leading to the transaction is of enough importance that without that involvement it would not take place. The second limb (article 25(2)) is potentially much wider as it does not require
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
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
The Regulated Activities Order contains an exclusion (article 27: Enabling parties to communicate) to bring a degree of certainty to this area. This applies to arrangements which might otherwise fall within article 25(2) merely because they provide the means by which one party to a transaction (or potential transaction) is able to communicate with other parties. In the FCA's view, the crucial element of the exclusion is the inclusion of the word ‘merely’. So that, where a publisher,
For example, in the FCA's view a publisher or broadcaster would be likely to be making arrangements within the meaning of article 25(2) and be unable to make use of the exclusion in article 27 if:(1) he enters into an agreement with a provider of investment services such as a broker or product provider for the purpose of carrying their financial promotion; and(2) as part of the arrangements, the publisher or broadcaster does one or more of the following:(a) brands the investment
It would also be an indicator that a publisher or broadcaster might be making arrangements falling within article 25(2) if he receives a commission or other form of reward based on the amount of regulated business done as a result of his carrying the promotion. This would be on the basis that the existence of the financial interest will inevitably have a bearing on the purpose for which the arrangements are viewed as having been made by him. However, the article 27 exclusion will
Other persons who may benefit from the exclusion in article 27 include persons who provide the means for someone to route an order to another person. A person providing such order routing services would not, in the FCA's view, be merely facilitating communication (of the orders) if he provides added value. This added value could be in the form, for example, of such things as formatted screens, audit trails, checking completeness of orders or matching orders or reconciling tra
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
The mere provision by a website operator of a bulletin board or chat room ought not to amount to making arrangements under article 25(2) unless making such arrangements is the specific purpose of the facility. However, operators of websites with such facilities will clearly need to be aware of potential implications (such as the service being used by unauthorised persons to give advice or make financial promotions or to make misleading statements with a view to manipulating market
Where persons are making arrangements concerning contracts of insurance or are carrying on insurance distribution or reinsurance distribution2 certain exclusions to article 25 are not available. This results from the requirements of the IDD2 and is explained in more detail in PERG 5.6 (2The regulated activities: arranging deals in, and making arrangements with a view to transactions in, contracts of insurance).
Article 53(1)2 of the Regulated Activities Order (Advising on Investments (except P2P agreements)2) 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
Advice about contracts of insurance will come within the regulated activity in article 53(1)2 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(1)2. In particular:(1) advice would come within article 53(1)2 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
Typical recommendations and whether they will be regulated as advice on contracts of insurance under article 53(1)2 of the Regulated Activities Order. This table belongs to PERG 5.8.4 G.2
Recommendation |
Regulated under article 53(1)2 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 |
For the purposes of article 53(1)2, advice must be given to a person in that person’s’3 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(1)2 will not apply where advice is given to persons who receive it as:(1) an adviser who will use it only to inform advice they give3 to others; or(2) a journalist or broadcaster who will use it only for journalistic purposes
Advice will still be covered by article 53(1)2 even though it may not be given to any particular policyholder (for example, advice given in a periodical publication or on a website). Such advice would, however, be unlikely to be a personal recommendation (see PERG 5.8.3AG, PERG 8.24.1G and PERG 8.30BG).3
In the case of article 53(1)2, 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
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
Advice under article 53(1)2 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.
The requirements imposed by the IDD3 (see PERG 5.2.5 G (Approach to implementation of the IMD)) and the text of article 2.3 IDD3 articles 2.1(1), 2.1(2) and 2. 2 in PERG 5.16.1 G3are narrower than the scope of the Regulated Activities Order (see PERG 5.2.7 G (Approach to implementation of the IDD)). Unlike3 the Regulated Activities Order, they do not relate to the assignment of contracts of insurance. This is of relevance to, amongst others, persons involved in the 'second-hand'
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(1)2. 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).
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 distribution carried on?)),3the use of the medium itself to give advice should make no material difference to whether
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
The Regulated Activities Order contains other limited exclusions which have the effect of preventing certain activities from amounting to advice on contracts of insurance. These are referred to in PERG 5.11.8 G (Exclusions applying to more than one regulated activity) to PERG 5.11.16 G (Large risks).
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
For advice to fall within article 53A as set out in PERG 4.6.1 G it must:(1) relate to a particular mortgage contract (that is, one that the borrower may enter into or, in the case of advice on a variation, one that he has already entered into);(2) be given to a person in his capacity as a borrower or potential borrower;(3) be advice (that is, not just information); and(4) relate to the merits of the borrower entering into, or varying the terms of, the contract.
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). Generic or general advice is not covered: examples of generic advice are shown in PERG 4.6.7G (but see PERG 4.6.7AG as well). Generic or general advice may, however, be a financial promotion (see PERG 8.4 (Invitation or inducement)).
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 on7 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 on7 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 on7 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. |
Yes. See PERG 4.6.6 G.2 2 |
I suggest you take out (or do not take out) a mortgage with ABC Building Society. |
Yes. See PERG 4.6.6 G.2 2 |
I suggest you change (or do not change) your current mortgage from a variable rate to a fixed rate. |
Yes. This is advice7 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 on7 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 on7 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 is not advice on7 a particular mortgage that the borrower7 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. |
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
Article 53A will not, for example, apply where advice is given to persons who receive it as:(1) a lender under or administrator of a regulated mortgage contract; or(2) an adviser who may use it to inform advice given by him to others; or(3) a journalist or broadcaster; or(4) an agent of a borrower unless appointed as the borrower's attorney and therefore entering into the regulated mortgage contract as agent (or proxy) for the borrower.
Without an explicit or implicit recommendation7 on the merits of entering into as borrower or varying the terms of a regulated mortgage contract, advice will not fall under article 53A if it is advice on:7(1) the likely meaning of uncertain provisions in a regulated mortgage contract; or7(2) how to complete an application form; or7(3) the effect of contractual terms and their consequences; or7(4) terms which are common in the market.7
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 to advising on regulated mortgage contracts if the principal purpose of any of these publications, news and information services or broadcasts7 is neither to give advice of the kind to which7 article
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) and PERG 4.10B (Regulation of buy to let lending)55
6(1) Article 53(1) of the Regulated Activities Order (Advising on investments) deals with giving advice in relation to a security, a structured deposit or a relevant investment.9(2) A summary can be found in PERG 8.24 (Advising on investments). PERG 8.25 to PERG 8.30B give more detail.9(3) As described in PERG 8.24, for certain firms, the regulated activity only covers giving personal recommendations.9
6Under article 53(2) 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 their capacity as a lender or potential lender under a relevant article 36H agreement (defined in article 53(4) of the Regulated Activities Order) or as an agent for a lender or potential lender under such an agreement; and(2) it is advice on the merits of their doing any of the following (whether as principal
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
1Under article 53B of the Regulated Activities Order (Advising on regulated home reversion plans), advising a person is a specified kind of activity if:(1) the advice is given to the person in his capacity as a reversion occupier or reversion provider or as a potential reversion occupier or reversion provider; and(2) it is advice on the merits of his doing any of the following:(a) entering into a particular home reversion plan; or(b) varying the terms of a home reversion plan
1Under article 53C of the Regulated Activities Order (Advising on regulated home purchase plans), advising a person is a specified kind of activity if:(1) the advice is given to the person in his capacity as a home purchaser or potential home purchaser; and(2) it is advice on the merits of his doing any of the following:(a) entering into a particular home purchase plan; or(b) varying the terms of a home purchase plan entered into by him on or after 6 April 2007 in such a way as
3Under article 53D of the Regulated Activities Order (Advising on regulated sale and rent back agreements), advising a person is a specified kind of activity if:(1) the advice is given to the person in his capacity as an SRB agreement seller or SRB agreement provider or as a potential SRB agreement seller or SRB agreement provider; and(2) it is advice on the merits of his doing any of the following:(a) entering into a particular regulated sale and rent back agreement; or(b) varying
4Under article 53DA of the Regulated Activities Order (Advising on regulated credit agreements for the acquisition of land), advising a person (“P”) is a specified kind of activity if:(1) the advice is given to P in P’s capacity as a recipient of credit, or potential recipient of credit, under a regulated credit agreement;(2) P intends to use the credit to acquire or retain property rights in land or in an existing or projected building; and(3) the advice consists of the provision
5Under article 53E of the Regulated Activities Order (Advising on conversion or transfer of pension benefits), advising a person (“P”) is a specified kind of activity if the advice:(1) is given to P in their capacity as:(a) a member of a pension scheme; or(b) a survivor of a member of a pension scheme;where P has subsisting rights in respect of any safeguarded benefits; and(2) (a) convert any of the safeguarded benefits into different benefits that are flexible benefits under
Articles 53,1 53A, 53B,3 53C1, 53D 53DA4 and 53E 5of the Regulated Activities Order contain a number of elements, all of which must be present before a person will require authorisation. For guidance on whether a person is carrying on these regulated activities, see PERG 8 (Financial promotion and related activities),1PERG 4 (Guidance on regulated activities connected with mortgages), PERG 12.6 (Advising on conversion or transfer of pension benefits), 5, 3PERG 14.3, 3PERG 14.4
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 land4,9 or advising on conversion or transfer of pension benefits advising on a home finance transaction . Also, the general prohibition will not be contravened if the exclusion for overseas persons
If a person is carrying on the business of advising on investments, advising on regulated credit agreements for the acquisition of land,9 advising on a home finance transaction or advising on conversion or transfer of pension benefits9 in the United Kingdom, he will not require authorisation if:41(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
Article 61(3)(a) of the Regulated Activities Order defines a regulated mortgage contract as a contract which, at the time it is entered into, satisfies the following conditions:(1) the contract is one where a lender provides credit to an individual or trustees (the 'borrower');(2) the contract provides for the obligation of the borrower to repay to be secured by a mortgage on land, where “land” for this purpose means:855(a) in relation to a contract entered into before IP completion
(1) Article 61(3)(c) of the Regulated Activities Order states that credit includes a cash loan and any other form of financial accommodation. Although 'financial accommodation' has a potentially wide meaning, its scope is limited by the terms used in the definition of a regulated mortgage contract set out in PERG 4.4.1 G. Whatever form the financial accommodation may take, article 61(3)(a) envisages that it must include 7an obligation to repay on the part of the individual who
5Under the Regulated Activities Order 'related person' means, in relation to the borrower or (for credit provided to trustees) a beneficiary of the trust:(1) that person's spouse or civil partner;(2) a person (whether or not of the opposite sex) whose relationship with that person has the characteristics of the relationship between husband and wife; or(3) that person's parent, brother, sister, child, grandparent or grandchild.
10A contract is excluded from the definition of regulated mortgage contract if, at the time is entered into, it meets the following conditions:(1) it is a bridging loan described in PERG 4.13.6G;(2) it is secured by an equitable mortgage on land; and(3) it is an exempt agreement within the meaning of article 60B(3) (regulated credit agreements) of the Regulated Activities Order by virtue of article 60E(2): in summary, the lender is a local authority, or the agreement is specified
10A contract is excluded from the definition of regulated mortgage contract if, at the time is entered into, it meets the following conditions:(1) it provides for credit to be granted by a ‘housing authority’ within the meaning of article 60E of the Regulated Activities Order. The definition in article 60E includes housing associations registered under the relevant housing legislation (see PERG 2.7.19FAG);(2) if entered into on or after 21 March 2016:(a) it is an agreement an
For a buy-to-let credit agreement (described in PERG 4.10B.5G), article 61A(5) of the Regulated Activities Order says that a borrower is to be regarded as entering into an agreement, or intending to enter into an agreement, for the purposes of a business if (1) or (2) are met:6(1) (a) the borrower previously purchased, or is entering into the contract in order to finance the purchase by the borrower of, the land secured by the mortgage;6(b) at the time of the purchase the borrower
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
The regulated activity of dealing in investments as agent applies to specified transactions relating to any security or to any relevant investment. The26 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 not apply if the transaction relates to a contract of insurance. There are certain conditions which
The various activities that involve arranging fall into two general types. These are:33(1) those relating to arranging a particular transaction or a contract, agreement5 or plan variation (articles 25(1), 25A(1), 25A(2A).12 25B(1),5 25C(1) , and 25E(1) 5of the Regulated Activities Order); and53(2) those relating to making arrangements with a view to persons entering into certain transactions (articles 25(2), 25A(2), 25B(2),5 25C(2) , and 25E(2) 5of the Regulated Activities Order).53The
3The exclusions in the Regulated Activities Order that relate to the various arranging activities are as follows.(-1) 25Under 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 2.7.6DG). 228(1) Under article 26, arrangements that do not or would not bring about the transaction
9The following activities are excluded from the regulated activity of credit broking:Introducing by individuals in the course of canvassing off trade premises(1) Activities carried on by an individual by canvassing off trade premises:(a) a restricted-use credit agreement to finance a transaction between the lender or a member of the lender's group and the borrower; or(b) a regulated consumer hire agreement;are excluded from credit broking, as long as the individual does not carry
(1) 9An activity of a kind specified below is excluded from the regulated activity of operating an electronic system in relation to lending:18(a) dealing in investments as principal;(b) arranging (bringing about) deals in investments;(c) making arrangements with a view to transactions in investments;(d) managing investments; and18(e) advising on investments (except P2P agreements)18.(1A) The regulated activity of advising on P2P agreements does not apply where such advice is given
The activities of persons appointed under a power of attorney are excluded under article 38 of the Regulated Activities Order, from the regulated activity of managing investments, if specified conditions are satisfied. The exclusion only applies where a person is not carrying on insurance distribution or reinsurance distribution20 and is subject to further limitations discussed below2. In addition, the following exclusions (outlined in PERG 2.9) apply in specified circumstances
18The regulated activity of advising on P2P agreements does not apply in so far as the advice is given in the course of carrying on an activity of a kind specified by:(1) article 39F of the Regulated Activities Order (debt collecting); or(2) article 39G of the Regulated Activities Order (debt administration);by a person carrying on that activity not in contravention of the general prohibition.
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
10(1) 22The exclusion for business angel-led capital funds (see PERG 2.9.20 G) applies to the activities of managing an AIF, managing a UK UCITS22 and establishing, operating and winding up a collective investment scheme.10There is a third exclusion for insolvency practitioners (see PERG 2.9.25 G).9(2) In addition, there are two further exclusions which apply to the activity of establishing, operating or winding up a collective investment scheme:10(a) the exclusion in PERG 2.9.22
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.
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.
The exclusions in article 72(5A) to (5F) of the Regulated Activities Order (Overseas persons) provide that an overseas person does not carry on the regulated activities of:(1) arranging (bringing about) or making arrangements with view to a regulated mortgage contract;(2) entering into a regulated mortgage contract; or(3) administering a regulated mortgage contract;of the borrower (and each of them, if more than one) is an individual and is normally resident outside the United
The FCA's view of the effect of the Act and Regulated Activities Order in various territorial scenarios is set out in the remainder of this section. In those scenarios:(1) the term "service provider" is used to describe a person carrying on any of the regulated mortgage activities;(2) the term "borrower" refers to a borrower who is an individual and not a trustee; the position of a borrower acting as a trustee is not considered; and(3) it is assumed that the activity is not an
There may also be situations where a lender, who does not maintain an establishment in the United Kingdom, provides services in the United Kingdom. For instance, a lender might attend a property exhibition in the United Kingdom at which he sets up a loan with a borrower. A lender might also attend the offices of its UK-based lawyers, or appoint them as its agent, to enter into a contract with a borrower. In these cases, the overseas lender would only be carrying on a regulated
If a service provider is overseas, the question of whether that person is carrying on a regulated activity in the United Kingdom will depend upon:(1) the type of regulated activity being carried on;(2) section 418 of the Act;(3) the residence and location of the borrower;(4) the application of the overseas persons exclusion in article 72(5A) to (5F) of the Regulated Activities Order; and(5) whether the service provider is carrying on an electronic commerce activity.The factors
When a person is arranging (bringing about) regulated mortgage contracts or making arrangements with a view to regulated mortgage contracts from overseas, the question of whether he will be carrying on regulated activities in the United Kingdom will depend on the relevant circumstances. In the FCA's view, factors to consider include:(1) the territorial limitation in the definition of regulated mortgage contract so that regulation only applies if the land is in the United Kingdom5;44(2)
In the FCA's view, in circumstances other than those excluded by article 72(5D) of the Regulated Activities Order, the need for an overseas lender to be authorised or to have an exemption will depend on the location of the land.4 This is because of:4(1) the territorial limitation in the definition of regulated mortgage contract so that regulation applies only if the land is in the United Kingdom5;44(2) the general principle and practice that contracts relating to land are usually
The effect of article 72(5E) and (5F) of the Regulated Activities Order is that an overseas person who administers a regulated mortgage contract, where the borrower was resident overseas at the time that the contract was entered into, does not carry on the regulated activity of administering a regulated mortgage contract.
In the FCA's view, in circumstances other than those excluded by article 72(5E) of the Regulated Activities Order, the need for an overseas administrator to be authorised or to have an exemption will depend on the location of the land.4 This is because:4(1) the territorial limitation in the definition of regulated mortgage contract means that regulation applies only if the land is in the United Kingdom5;44(2) when administrators notify borrowers resident in the United Kingdom5
(1) For the purposes of articles 60H(1)(c) and 60Q(b) of the Regulated Activities Order and of CONC 1.2.10R(2), a declaration made by the borrower or hirer which provides that the borrower or hirer agrees to forgo the protection and remedies that would be available to the borrower or hirer if the agreement were a regulated credit agreement or a regulated consumer hire agreement must comply with CONC App 1.4.2R and either CONC App 1.4.6R or, in the case of an MCD article 3(1)(b)
A declaration for the purposes of articles 60H(1)(c) and 60Q(b) of the Regulated Activities Order and of CONC 1.2.10R(2) shall 2(1) be set out in the credit agreement or consumer hire agreement no less prominently than other information in the agreement and be readily distinguishable from the background medium; and(2) be signed by the borrower or hirer, unless the agreement is so signed.
A declaration for the purposes of articles 60C or 60O of the Regulated Activities Order shall(1) comply with CONC App 1.4.8 R;(2) be set out in the credit agreement or consumer hire agreement no less prominently than other information in the agreement and be readily distinguishable from the background medium; and(3) be signed by the borrower or hirer or where the borrower or hirer is a partnership or unincorporated body of persons be signed by, or on behalf of, the borrower or
The declaration for the purposes of articles 60H(1)(c) and 60Q(b) of the Regulated Activities Order must have the following form and content- 2“Declaration by high net worth borrower or hirer(articles 60H(1) and 60Q of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001)2I confirm that I have received a copy of the statement of high net worth made in relation to me for the purposes of article 60H(1)(d) 2or article 60Q(c) of the Financial Services and
2Declaration by high net worth borrower under an MCD article 3(1)(b) credit agreementThe declaration for the purposes of article 60H(1)(c) of the Regulated Activities Order and of CONC 1.2.10R(2) must have the following form and content-
“Declaration by high net worth borrower under an MCD article 3(1)(b) credit agreement
(article 60H(1)(c) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001)I confirm that I have received a copy of the statement of
A statement of high net worth for the purposes of articles 60H(1)(d) and 60Q(c) of the Regulated Activities Order must have the following form and content: 2“Statement of High Net Worth(articles 60H(1) and 60Q of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001)2I/We* (insert full name) .............................................................. of (insert address and postcode).............................................................. confirm
A declaration for the purposes of articles 60C or 60O of the Regulated Activities Order must have the following form and content“Declaration for exemption relating to businesses(articles 60C and 60O of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001)I am/We are* entering this agreement wholly or predominantly for the purposes of a business carried on by me/us or intended to be carried on by me/us.I/We* understand that I/We* will not have the benefit
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 |
|
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
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
Some of the exclusions referred to in the Solvency II Directive7 mirror exclusions in the Regulated Activities Order. So, the exclusion for breakdown insurance in article 6 of the Solvency II Directive7 is matched by a slightly narrower exclusion in article 12 of the Regulated Activities Order (Breakdown insurance). The separate treatment of benefit-in-kind funeral plans under the Regulated Activities Order (see SUP App 3.10.4 G) is matched by their exclusion on a slightly wider
Under the Act and the Regulated Activities Order, the activities of effecting and carrying out contracts of insurance are treated as being carried on in the United Kingdom on the basis of legal tests under which the location of the risk is only one factor. If the risk is located in the United Kingdom, then (other relevant factors being taken into account) the activity will, in the vast majority of cases, also be viewed as carried on in the United Kingdom. There are exceptions,
So, the effect of App 3.12.1 is that an insurer may be carrying on insurance business in the United Kingdom which is to be treated as a regulated activity under article 10 to the Regulated Activities Order (Effecting and carrying out contracts of insurance) in circumstances where the risks covered are treated as located in another EEA State. In that event, the insurer is required by Schedule 3 to the Act to passport into the State concerned and may be subject to conduct of business
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 IDD14. 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 a firm is carrying on
In considering the issues raised in the tables, firms should note that:(1) article 64 of the Regulated Activities Order (Agreeing to carry on specific kinds of activity) may apply12 in respect of agreeing to undertake the specified activity (see PERG 2.7.21G)12; and(2) article 89 of the Regulated Activities Order (Rights to or interests in investments) applies in respect of rights to and interests in the types of investments to which the category applies.
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 | 1
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 |
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Part II RAO Activities13 |
Part III RAO Investments |
||
1. |
Reception and transmission of orders in relation to one or more financial instruments |
Article 252 |
Article 76-81, 82B,12 83-85, 89 |
2. |
Execution of orders on behalf of clients |
Article 14, 21 |
A Article 76-81,82B,12 83-85, 89 |
3. |
Dealing on own account |
Article 14 |
Article 76-81, 82B,12 83-85, 89 |
4. |
Portfolio management |
Article 37 (14, 21, 25 - see Note 1) 2 |
Article 76-81, 82B,12 83-85, 89 |
5. |
Investment advice |
Article 53(1)10 |
Article 76-81, 82B,12 83-85, 89 |
6. |
Underwriting of financial instruments and/or placing of financial instruments on a firm commitment basis |
Article 14, 21 |
Article 76-81, 82B,12 83-85, 89 |
7. |
Placing of financial instruments without a firm commitment basis |
Article 21, 25 |
Article 76-81, 82B,12 83-85, 89 |
8. |
Operation of Multilateral Trading Facilities |
Article 25D5 (see Note 2) 5 |
Article 76-81, 82B,12 83-85, 89 |
12 9. |
Operation of an OTF |
Article 25DA (see Note 3) |
Article 77, 77A, 78, 79, 80, 81, 82B, 83-85, 89 |
Ancillary services |
Part II RAO Activities |
Part III RAO Investments |
|
1. |
Safekeeping and administration of financial instruments for the account of clients, including custodianship and related services such as cash/collateral management |
Article 40, 45, 64 |
Article 76-81, 82B,12 83-85, 89 |
2. |
Granting credits or loans to an investor to allow him to carry out a transaction in one or more of the relevant instruments where the firm granting the credit or loan is involved |
||
3. |
Advice to undertakings on capital structure, industrial strategy and related matters and advice and services relating to mergers and the purchase of undertakings |
Article 14, 21, 25, 53(1)10, 64 |
Article 76-80, 82B,12 83-85, 89 |
4. |
Foreign exchange services where these are connected with the provision of investment services |
Article 14, 21, 25, 53(1)10, 64 |
Article 83-85, 89 |
5. |
Investment research and financial analysis or other forms of general recommendation relating to transactions in financial instruments |
Article 76-81, 82B,12 83-85, 89 |
|
6. |
Services related to underwriting |
Article 25, 53(1)10, 64 |
Article 76-81, 82B,12 83-85, 89 |
7. |
Investment services and activities as well as ancillary services of the type included under Section A or B of Annex I related to the underlying of the derivatives included under Section C 5, 6, 7 and 10-where these are connected to the provision of investment or ancillary services. |
Article 14, 21, 25, 25D,5 37, 53(1)10, 64 5 |
Article 83 and 84 |
Note 1. A firm may also carry on these other activities when it is managing investments.2 |
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Note 2. A firm operating an MTF under article 25D5 does not need to have a permission covering other regulated activities, unless it performs other regulated activities in addition to operating an MTF. 5 |
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Note 3. A firm operating an OTF under article 25DA does not need to have a permission covering other regulated activities, unless it performs other regulated activities in addition to operating an OTF.12 |
|||
13Note 4: A firm which provides investment research and financial analysis or other forms of general recommendation relating to transactions in financial instruments does not need permission under article 53(1) of the Regulated Activities Order if it is appropriately authorised (see article 53(1) to (1D) of the Regulated Activities Order). |
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Table 2ZA: AIFMD activities |
Part II RAO Activities |
Part III RAO Investments |
|
1. |
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, 82B,12 83 to 85, 89 |
3. |
Investment advice (Note 2). |
Articles 53(1)10, 64 |
Articles 76 to 81, 82B,12 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, 82B,12 83 to 85, 89 |
5. |
Reception and transmission or orders in relation to financial instruments. |
Articles 25(1), 64 |
Articles 76 to 81,82B,12 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. |
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Note 2. See FUND 1.4.5 G for the position with respect to assets which are not financial instruments. |
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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, 82B,12 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, 82B,12 83-85, 89 |
4. |
Safekeeping and administration services in relation to units of collective investment undertakings. |
Articles 40, 45, 64 |
Articles 76-81, 82B,12 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 |
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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). |
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Table 2B: Insurance Distribution14Directive2 Activities/Examples14 2 |
Part II RAO Activities |
Part III RAO Investments |
|
1. |
Proposing14 or carrying out other work preparatory to the conclusion of contracts of insurance or reinsurance14. |
Articles 25, 53(1)10 and 64 |
Articles 75, 89 (see Note 1) |
141A. |
Advising on contracts of insurance or reinsurance |
Articles 53(1) and 64 |
Articles 75, 89 |
2. |
Concluding contracts of insurance or reinsurance14 |
Articles 21, 25, 53(1)10 and 64 |
Articles 75, 89 |
3. |
Assisting in the administration and performance of contracts of insurance or reinsurance14, in particular in the event of a claim. |
Articles 39A, 64 |
Articles 75, 89 |
144 |
Provision of information concerning one or more insurance contracts in accordance with criteria selected by customers through a website or other media and the compilation of an insurance product ranking list, including price and product comparison, or a discount on the price of an insurance contract, when the customer is able to directly or indirectly conclude an insurance contract using a website or other media. |
Articles 21, 25, (where this involves the provision of advice) 53(1), and 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. |
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14Note 2. Row 4 in Table 2B includes text that appears in article 2.1(1) of the IDD. These activities are not considered to be separate, discrete activities under the IDD but rather are included by way of an example of what constitutes insurance distribution. They have been included in this table for completeness, together with an indication of the Part II RAO activities and Part III RAO investments that may be relevant. This is to indicate, including for firms considering undertaking passport activities under the IDD, how these examples may relate to regulated activities and specified investments. |
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With regard to4 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 exclusion does not apply when the definition of advising
It is also possible for advice to be excluded if it is given by a person in the course of carrying on a profession or business (other than a regulated activity). This is if it is reasonably to be regarded as necessary for him to give the advice to provide his professional or other services and he is not separately paid for giving the advice (article 67: Activities carried on in the course of a profession or non-investment business). This could arise in the context of advice given
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 distribution or reinsurance distribution3. This results from the requirements of the IDD3 and is explained in more detail in PERG 5 (Guidance on insurance distribution3 activities).
Article 61(2) of the Regulated Activities Order makes administering a regulated mortgage contract a regulated activity 'where the contract was entered into by way of business' on or after 31 October 2004 or the contract was entered into ‘by way of business’ before that date and is a legacy CCA mortgage contract5.
Under article 61(3)(b) of the Regulated Activities Order, administering a regulated mortgage contract is defined as either or both of:(1) notifying the borrower of changes in interest rates or payments due under the contract, or of other matters of which the contract requires him to be notified; and(2) taking any necessary steps for the purposes of collecting or recovering payments due under the contract from the borrower;but does not include merely having or exercising a right
Article 62 of the Regulated Activities Order provides that a person who is not an authorised person does not administer a regulated mortgage contract if he:(1) arranges for a firm with permission to administer a regulated mortgage contract (a 'mortgage administrator') to administer the contract; or(2) administers the regulated mortgage contract itself, provided that the period of administration is no more than one month after the arrangement in (1) has come to an end.
Under article 63 of the Regulated Activities Order, a person who is not an authorised person does not administer a regulated mortgage contract if he administers the contract under an agreement with a firm with permission to administer a regulated mortgage contract. A firm with permission to administer a regulated mortgage contract may thus outsource or delegate the administration function to an unauthorised third party. A firm that proposes to do this should however note, as set
The Regulated Activities Order contains an exclusion which has the effect of preventing certain activities of trustees, nominees and personal representatives from amounting to administering regulated mortgage contracts. There is also an exclusion for local authorities and their wholly-owned subsidiaries.32 These are2 referred to in PERG 4.10 (Exclusions applying to more than one regulated activity). In addition, there2are exclusions 4where both the administrator and borrower are
Article 29 of the Regulated Activities Order states that certain arrangements are not covered by article 25. These are arrangements made by an unauthorised person ('A'). The arrangements must be made for or with a view to a transaction which is or is to be entered into by another person (the client) with or through an authorised person. It must also be the case that:(1) the transaction is or will be entered into on advice given to the client by an authorised person; or(2) it is
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
The exclusions in articles2 29 and 33 of the Regulated Activities Order are not available where the investment is a contract of insurance (unless, as regards article 33, the relevant arrangements meet the requirements of article 33B).2 However, certain other exclusions do apply. This results from implementation of the requirements of the IDD2 and is explained in more detail in PERG 5.6 (The regulated activities: arranging deals in, and making arrangements with a view to transactions