2026 PSC Notes - Financial and Business Skills LB:
Regulated Activities & Compliance University of Law
This document discusses the regulatory framework under the Financial Services and Markets Act (FSMA) in the UK, focusing on the requirements for
solicitors engaging in regulated activities. It outlines key questions regarding business operations, specified investments, and applicable exclusions,
providing examples and legal references to ensure compliance
QUESTION 1
No person may carry on a regulated activity in the UK unless authorised or exempt (s19 FSMA). Need
to ensure that the firm is not commiṄng a criminal offence by carrying out a regulated activity
without authority pursuant to S 23 FSMA, so we need to consider the effect of FSMA.
Regulated Activity – the 4 key questions
1. Is the firm of solicitors in business?
a. Yes – providing service to client
2. Is there a specific investment?
a. Give max 3 examples in line with facts – display knowledge
b. Give 2 and maybe one that isn’t relevant and reason why
3. Is there a specified investment activity?
a. Give max 3 examples in line with facts - things that are and things that are not –
display knowledge across 3 examples of activities
b. Give 2 and maybe one that isn’t and reason why
4. Is there an applicable exclusion?
a. If there is an applicable exclusion this is not a regulated activity and allowed to do it
b. Give max 3 examples in line with facts – maybe 2 apply and 1 doesn’t eg if widow of
estate exists, we have an executor – don’t need a PR/trustee therefore trustee
exclusion wouldn’t be relevant here
c. If there’s not an exclusion then s327
d. Insurance is NOT EXCLUDED MUST USE 327
, 1. Are you in Business?
a. For an activity to be a regulated activity under FSMA, it must be “carried on by way of business”.
As the firm is providing a service for the client, it is in business for FSMA purposes.
2. Are there any specified investments?
a. A specified investment is one that has been specified as such by the RAO. The specified
investments involved in this scenario include: [list and relate to facts]
b. The following are not considered to be specified investments [list and relate to facts]
Type of Investment Associated activity
• Advising – giving advice to client
Category of
• Arranging – helping client to buy or sell
Investment
• Dealing – Solicitor is doing the act
Securities • Shares 1. Arranging deals in investments
• Bonds and debentures • Applies to securities and relevant investments.
• Gilts • Solicitor facilitates client to buy / sell security or
• Warrants relevant investment or makes arrangement with a view
• Units in a unit trust / OEIC to deal (i.e. completing stock transfer form or put in
• Stakeholder and personal touch with stockbroker)
pension (not an occupational
pension) 2. Advising on investment
• Applies to securities and relevant investments.
• Advising a person on merits of buying / selling securities
or relevant investments.
• Advice must be specific – generic advice not caught (i.e.
just advice to invest in shares).
• if giving generic advice solicitor must comply with SRA
codes
3. Managing investments
• Applies to security or contractually based investment
• Solicitor does not own the property, but client gives the
solicitor sole discretion to manage the porVolio (usually
where s is trustee or PR)
4. Safeguarding and administering investments
• Applies to securities or contractually based investments
• Solicitor needs to be controlling the securities (i.e.
custody of share certificate,) and doing something else
(i.e. dealing with dividend income, voting at GM,
letterbox)
5. Dealing as principal
• Applies to securities or contractually based investments
• Solicitor needs to be buying in their own name as
principal (they own the legal title)
• usually occurs where trustee or PR – VERY RARE
6. Dealing as agent
• Applies to securities and relevant investments
• Usually mistake – acting in solicitors name but behalf of
client (e.g. where stockbroker addresses contract note
to solicitor)
, • ALL Insurance contracts See Securities for potential activities which might apply
(including both qualifying and
non-qualifying) FOR INSURANCE DISTRIBUTION ACTIVITIES (insurance
• Options products)
• Futures 1. Arranging on insurance contract
• Contracts for difference Making arrangements which lead to client acquiring/
• Rights under funeral plan disposing insurance \(i.e. referring to insurance broker)
contracts
2. Advising on insurance contract
Advising on the merits of acquiring / surrendering
Relevant
insurance
Investments
3. Dealing in insurance as agent
Enter into insurance contract on client’s behalf
4. Assisting in the administration and performance of a
contract of insurance
Helping client make a claim under a policy / get a pay-out
Applies to all stages of work with an actual insurance contact
(i.e. from geṄng quote to defending claim of insurance)
Contractually • Qualifying contracts of See Securities for potential activities which might apply
Based Insurance (whole life,
endowment, annuity) See note on Insurance Distribution Activities which might
• Options apply
• Futures
Investments • Contracts for difference
• Rights under funeral plan
contracts
Three conditions to be met for 1. Arranging RMC
mortgage to be RMC: Arranging for person to:
1. First Charge over borrower’s enter into the RMC / vary the terms of existing RMC
dwelling or making arrangements with a view to RMC (i.e.
2. More than 40% of area referring to mortgage broker)
residential (mixed use)
3. Borrower must live in the 2. Advising on RMC
property Must be giving specific advice on the merits of:
Regulated (so does not cover buy to let / entering into RMC or
Mortgage commercial or second vary terms of a particular RMC
Contracts mortgages)
3. Entering into an RMC as Lender
Typically requires solicitor to lend money to buyer –
very rare. But possible if solicitor acting as trustee.
4. Administering RMC
Typically acting for a lender -requires notifying
borrower of changes or collecting / recovery of
money due from borrower
, • Equity release and home 1. Arranging on home reversion / home purchase
reversion plans / sale and rent back
• Sharia finance
• Sale and repurchase 2. Advising on home reversion / home purchase plans /
Regulated home agreements sale and rent back
finance
transactions 3. Entering into as lender on home reversion / home
purchase plans / sale and rent back
4. Administering on home reversion / home purchase
plans / sale and rent back
• Agreement between lender and 1. Credit broking activities
non-corporate individual (must Effecting introduction to someone who wants and a
be under 25k and not for provider of credit (e.g. giving out a flyer)
business purposes)
Consumer
2. Debt related activities
credit / hire
• Hire purchase – right to use it, Entering into an agreement to assist with debt
agreements
you do not own it (vehicle adjusting, debt counselling, debt collecting and debt
leasing) administering (e.g. helping them collect/ enforce
debt, reschedule debt)
Regulated Activities & Compliance University of Law
This document discusses the regulatory framework under the Financial Services and Markets Act (FSMA) in the UK, focusing on the requirements for
solicitors engaging in regulated activities. It outlines key questions regarding business operations, specified investments, and applicable exclusions,
providing examples and legal references to ensure compliance
QUESTION 1
No person may carry on a regulated activity in the UK unless authorised or exempt (s19 FSMA). Need
to ensure that the firm is not commiṄng a criminal offence by carrying out a regulated activity
without authority pursuant to S 23 FSMA, so we need to consider the effect of FSMA.
Regulated Activity – the 4 key questions
1. Is the firm of solicitors in business?
a. Yes – providing service to client
2. Is there a specific investment?
a. Give max 3 examples in line with facts – display knowledge
b. Give 2 and maybe one that isn’t relevant and reason why
3. Is there a specified investment activity?
a. Give max 3 examples in line with facts - things that are and things that are not –
display knowledge across 3 examples of activities
b. Give 2 and maybe one that isn’t and reason why
4. Is there an applicable exclusion?
a. If there is an applicable exclusion this is not a regulated activity and allowed to do it
b. Give max 3 examples in line with facts – maybe 2 apply and 1 doesn’t eg if widow of
estate exists, we have an executor – don’t need a PR/trustee therefore trustee
exclusion wouldn’t be relevant here
c. If there’s not an exclusion then s327
d. Insurance is NOT EXCLUDED MUST USE 327
, 1. Are you in Business?
a. For an activity to be a regulated activity under FSMA, it must be “carried on by way of business”.
As the firm is providing a service for the client, it is in business for FSMA purposes.
2. Are there any specified investments?
a. A specified investment is one that has been specified as such by the RAO. The specified
investments involved in this scenario include: [list and relate to facts]
b. The following are not considered to be specified investments [list and relate to facts]
Type of Investment Associated activity
• Advising – giving advice to client
Category of
• Arranging – helping client to buy or sell
Investment
• Dealing – Solicitor is doing the act
Securities • Shares 1. Arranging deals in investments
• Bonds and debentures • Applies to securities and relevant investments.
• Gilts • Solicitor facilitates client to buy / sell security or
• Warrants relevant investment or makes arrangement with a view
• Units in a unit trust / OEIC to deal (i.e. completing stock transfer form or put in
• Stakeholder and personal touch with stockbroker)
pension (not an occupational
pension) 2. Advising on investment
• Applies to securities and relevant investments.
• Advising a person on merits of buying / selling securities
or relevant investments.
• Advice must be specific – generic advice not caught (i.e.
just advice to invest in shares).
• if giving generic advice solicitor must comply with SRA
codes
3. Managing investments
• Applies to security or contractually based investment
• Solicitor does not own the property, but client gives the
solicitor sole discretion to manage the porVolio (usually
where s is trustee or PR)
4. Safeguarding and administering investments
• Applies to securities or contractually based investments
• Solicitor needs to be controlling the securities (i.e.
custody of share certificate,) and doing something else
(i.e. dealing with dividend income, voting at GM,
letterbox)
5. Dealing as principal
• Applies to securities or contractually based investments
• Solicitor needs to be buying in their own name as
principal (they own the legal title)
• usually occurs where trustee or PR – VERY RARE
6. Dealing as agent
• Applies to securities and relevant investments
• Usually mistake – acting in solicitors name but behalf of
client (e.g. where stockbroker addresses contract note
to solicitor)
, • ALL Insurance contracts See Securities for potential activities which might apply
(including both qualifying and
non-qualifying) FOR INSURANCE DISTRIBUTION ACTIVITIES (insurance
• Options products)
• Futures 1. Arranging on insurance contract
• Contracts for difference Making arrangements which lead to client acquiring/
• Rights under funeral plan disposing insurance \(i.e. referring to insurance broker)
contracts
2. Advising on insurance contract
Advising on the merits of acquiring / surrendering
Relevant
insurance
Investments
3. Dealing in insurance as agent
Enter into insurance contract on client’s behalf
4. Assisting in the administration and performance of a
contract of insurance
Helping client make a claim under a policy / get a pay-out
Applies to all stages of work with an actual insurance contact
(i.e. from geṄng quote to defending claim of insurance)
Contractually • Qualifying contracts of See Securities for potential activities which might apply
Based Insurance (whole life,
endowment, annuity) See note on Insurance Distribution Activities which might
• Options apply
• Futures
Investments • Contracts for difference
• Rights under funeral plan
contracts
Three conditions to be met for 1. Arranging RMC
mortgage to be RMC: Arranging for person to:
1. First Charge over borrower’s enter into the RMC / vary the terms of existing RMC
dwelling or making arrangements with a view to RMC (i.e.
2. More than 40% of area referring to mortgage broker)
residential (mixed use)
3. Borrower must live in the 2. Advising on RMC
property Must be giving specific advice on the merits of:
Regulated (so does not cover buy to let / entering into RMC or
Mortgage commercial or second vary terms of a particular RMC
Contracts mortgages)
3. Entering into an RMC as Lender
Typically requires solicitor to lend money to buyer –
very rare. But possible if solicitor acting as trustee.
4. Administering RMC
Typically acting for a lender -requires notifying
borrower of changes or collecting / recovery of
money due from borrower
, • Equity release and home 1. Arranging on home reversion / home purchase
reversion plans / sale and rent back
• Sharia finance
• Sale and repurchase 2. Advising on home reversion / home purchase plans /
Regulated home agreements sale and rent back
finance
transactions 3. Entering into as lender on home reversion / home
purchase plans / sale and rent back
4. Administering on home reversion / home purchase
plans / sale and rent back
• Agreement between lender and 1. Credit broking activities
non-corporate individual (must Effecting introduction to someone who wants and a
be under 25k and not for provider of credit (e.g. giving out a flyer)
business purposes)
Consumer
2. Debt related activities
credit / hire
• Hire purchase – right to use it, Entering into an agreement to assist with debt
agreements
you do not own it (vehicle adjusting, debt counselling, debt collecting and debt
leasing) administering (e.g. helping them collect/ enforce
debt, reschedule debt)
