Section C: Financial Services
● s.22(4) FSMA ‘investment’ = any
S.19 FSMA, the ‘general asset, right or interest
prohibition’ ● s.22(5) FSMA ‘specified’ means
specified in an order made by the
Treasury
‘Financial services’:
1. Advising on,
2. Dealing in, Regulated activity =
3. Arranging Specified Investment + Specified Activity
Investment products on behalf of clients
Key provision: RAO 2001, establishes the Q.1 Specified investments (Part III RAO)
activities to be regulated by FSMA if they
carried on in the UK by a business entity ● Rights under a contract of insurance
Regulators: (Art 75),
1. PRA- Bank of England, ● Shares (Art 76),
2. FCA- conduct of business ● Instruments creating or acknowledging
supervision with 3 objectives: indebtedness (Art 77),
a. Secure a degree of ● Regulated mortgage contracts (Art 88)
protection for consumers, + ART 61(3) RAO;
b. Protect and enhance the - Provide credit to an individual,
integrity of the UK financial - Mortgage on land,
system, - At least 40% of the land is
c. Promote effective used
competition in the interests [Does not include a loan to
of consumers in the buy an office or loans to
markets. companies]
FSMA, an offence for a person to carry out a Q2. Specified activities (Part II RAO)
‘regulated activity’ in the UK in relation to
certain investments by way of business, ● Dealing in investments as principal
unless: (Art 14) or as agent (Art 21) .e.g.
a. Authorised by the PRA or FCA, or Buying, selling, subscribing or
b. Exempt from needing authorisation. underwriting securities or contractually
based investments,
.e.g. If a firm wants to ‘accept deposits’, it must ● Arranging deals in investments (Art
obtain authorisation from the PRA. Once 25),
approved, persons become ‘approved ● Managing investments (Art 37),
persons’ ● Safeguarding and administering
investments (Art 40),
General prohibition under s.19(1) FSMA ● Advising on the merit of investments
● Cannot carry out a regulated activity in (Art 53(1)) advice needs an element of
the UK unless, opinion on the part of the solicitor and
- An authorised person; or a recommendation as to a course of
- An exempt person (s.38 HM action
Treasury allows specified
persons or classes of person
to be exempt), Exemption Q3. ‘Is the activity excluded under FSMA’?
Order does not exempt
solicitors ● Acting as a trustee or PR (Art 66 RAO)
.e.g. If a solicitor acts as a bare trustee
[To check whether the work falls as a a solicitor will not be dealing in
regulated activity, use a decision tree] investments as a principal under Art
14 RAO, if he acts on the beneficiary’s
1. Regulated work, s.22(1) instructions OR where a solicitor is
acting as a trustee or PR and makes
‘Activity specified of a kind which is carried on arrangements which may fall within Art
by way of business and - 25(1) or (2), then the solicitor acts as a
a. Relates to an investment of a specified co-trustee or co-PR
kind;...
● s.22(4) FSMA ‘investment’ = any
S.19 FSMA, the ‘general asset, right or interest
prohibition’ ● s.22(5) FSMA ‘specified’ means
specified in an order made by the
Treasury
‘Financial services’:
1. Advising on,
2. Dealing in, Regulated activity =
3. Arranging Specified Investment + Specified Activity
Investment products on behalf of clients
Key provision: RAO 2001, establishes the Q.1 Specified investments (Part III RAO)
activities to be regulated by FSMA if they
carried on in the UK by a business entity ● Rights under a contract of insurance
Regulators: (Art 75),
1. PRA- Bank of England, ● Shares (Art 76),
2. FCA- conduct of business ● Instruments creating or acknowledging
supervision with 3 objectives: indebtedness (Art 77),
a. Secure a degree of ● Regulated mortgage contracts (Art 88)
protection for consumers, + ART 61(3) RAO;
b. Protect and enhance the - Provide credit to an individual,
integrity of the UK financial - Mortgage on land,
system, - At least 40% of the land is
c. Promote effective used
competition in the interests [Does not include a loan to
of consumers in the buy an office or loans to
markets. companies]
FSMA, an offence for a person to carry out a Q2. Specified activities (Part II RAO)
‘regulated activity’ in the UK in relation to
certain investments by way of business, ● Dealing in investments as principal
unless: (Art 14) or as agent (Art 21) .e.g.
a. Authorised by the PRA or FCA, or Buying, selling, subscribing or
b. Exempt from needing authorisation. underwriting securities or contractually
based investments,
.e.g. If a firm wants to ‘accept deposits’, it must ● Arranging deals in investments (Art
obtain authorisation from the PRA. Once 25),
approved, persons become ‘approved ● Managing investments (Art 37),
persons’ ● Safeguarding and administering
investments (Art 40),
General prohibition under s.19(1) FSMA ● Advising on the merit of investments
● Cannot carry out a regulated activity in (Art 53(1)) advice needs an element of
the UK unless, opinion on the part of the solicitor and
- An authorised person; or a recommendation as to a course of
- An exempt person (s.38 HM action
Treasury allows specified
persons or classes of person
to be exempt), Exemption Q3. ‘Is the activity excluded under FSMA’?
Order does not exempt
solicitors ● Acting as a trustee or PR (Art 66 RAO)
.e.g. If a solicitor acts as a bare trustee
[To check whether the work falls as a a solicitor will not be dealing in
regulated activity, use a decision tree] investments as a principal under Art
14 RAO, if he acts on the beneficiary’s
1. Regulated work, s.22(1) instructions OR where a solicitor is
acting as a trustee or PR and makes
‘Activity specified of a kind which is carried on arrangements which may fall within Art
by way of business and - 25(1) or (2), then the solicitor acts as a
a. Relates to an investment of a specified co-trustee or co-PR
kind;...
