lOMoARcPSD|17572840
PSC Notes - Financial and Business Skills
Financial Regulation andCompliance (BPP University)
, lOMoARcPSD|17572840
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 committing 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.
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
• Shares 1. Arranging deals in investments
• Bonds and debentures • Applies to securities and relevant investments.
• Gilts • Solicitor facilitates client to buy / sell security or relevant
• Warrants investment or makes arrangement with a view to deal (i.e.
• Units in a unit trust / OEIC completing stock transfer form or put in touch with
• Stakeholder and personal pension stockbroker)
(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 portfolio (usually
Securities 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)
, lOMoARcPSD|17572840
• ALL Insurance contracts (including See Securities for potential activities which might apply
both qualifying and non-qualifying)
• Options FOR INSURANCE DISTRIBUTION ACTIVITIES (insurance products)
• Futures 1. Arranging on insurance contract
• Contracts for difference Making arrangements which lead to client acquiring/ disposing
• Rights under funeral plan contracts insurance \(i.e. referring to insurance broker)
2. Advising on insurance contract
Advising on the merits of acquiring / surrendering insurance
Relevant
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 getting quote to defending claim of insurance)
• Qualifying contracts of Insurance See Securities for potential activities which might apply
(whole life, endowment, annuity)
• Options See note on Insurance Distribution Activities which might apply
Contractually
• Futures
Based 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 or
dwelling making arrangements with a view to RMC (i.e. referring to
2. More than 40% of area 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 mortgages) vary terms of a particular RMC
Contracts
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
Regulated home • Equity release and home reversion 1. Arranging on home reversion / home purchase plans /
finance • Sharia finance sale and rent back
transactions • Sale and repurchase agreements
2. Advising on home reversion / home purchase plans / sale
and rent back
3. Entering into as lender on home reversion / home
purchase plans / sale and rent back
PSC Notes - Financial and Business Skills
Financial Regulation andCompliance (BPP University)
, lOMoARcPSD|17572840
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 committing 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.
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
• Shares 1. Arranging deals in investments
• Bonds and debentures • Applies to securities and relevant investments.
• Gilts • Solicitor facilitates client to buy / sell security or relevant
• Warrants investment or makes arrangement with a view to deal (i.e.
• Units in a unit trust / OEIC completing stock transfer form or put in touch with
• Stakeholder and personal pension stockbroker)
(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 portfolio (usually
Securities 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)
, lOMoARcPSD|17572840
• ALL Insurance contracts (including See Securities for potential activities which might apply
both qualifying and non-qualifying)
• Options FOR INSURANCE DISTRIBUTION ACTIVITIES (insurance products)
• Futures 1. Arranging on insurance contract
• Contracts for difference Making arrangements which lead to client acquiring/ disposing
• Rights under funeral plan contracts insurance \(i.e. referring to insurance broker)
2. Advising on insurance contract
Advising on the merits of acquiring / surrendering insurance
Relevant
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 getting quote to defending claim of insurance)
• Qualifying contracts of Insurance See Securities for potential activities which might apply
(whole life, endowment, annuity)
• Options See note on Insurance Distribution Activities which might apply
Contractually
• Futures
Based 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 or
dwelling making arrangements with a view to RMC (i.e. referring to
2. More than 40% of area 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 mortgages) vary terms of a particular RMC
Contracts
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
Regulated home • Equity release and home reversion 1. Arranging on home reversion / home purchase plans /
finance • Sharia finance sale and rent back
transactions • Sale and repurchase agreements
2. Advising on home reversion / home purchase plans / sale
and rent back
3. Entering into as lender on home reversion / home
purchase plans / sale and rent back
