This note has been updated following the replacement of the FSA by the FCA and the PRA.
A guide to PLC's materials on regulated activities, including information about the general prohibition contained in the Financial Services and Markets Act 2000 (FSMA), specified investments and specified activities in the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (SI 2001/544) (RAO), the business test, territorial scope and exemptions.
PLC has a wide range of material to help determine whether a person is carrying on a regulated activity:
These resources can be accessed using the following links:
References to the general prohibition are to section 19 of the Financial Services and Markets Act 2000 (FSMA). Section 19 of FSMA states that a person must not carry on a regulated activity in the UK, or purport to do so, unless he is an authorised or exempt person. Carrying on a regulated activity in breach of the general prohibition is a criminal offence and may result in certain agreements being unenforceable.
For more information about the general prohibition, see the following resources:
A regulated activity is a specified activity that relates to a specified investment or property of any kind and is carried on by way of business (section 22, FSMA).
A specified activity or investment is one that has been specified as such in an order made by HM Treasury. The relevant order, the main statutory instrument relating to the regulation of UK financial services, is the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (SI 2001/544) (as amended) (RAO).
For an overview of the RAO, see Practice note, Regulated Activities Order: overview (www.practicallaw.com/6-202-3006).
For a flowchart setting out the main questions to be asked to determine whether a person is carrying on a regulated activity, see Flowchart: regulated activities (www.practicallaw.com/2-202-4036).
The specified investments contained in Part III of the RAO are set out in a table (see Practice note, Regulated Activities Order: overview: Specified investments (www.practicallaw.com/6-202-3006)). The table identifies the relevant RAO provisions and links to relevant PLC resources.
The specified activities contained in Part II of the RAO are set out in a table (see Practice note, Regulated Activities Order: overview: Specified activities (www.practicallaw.com/6-202-3006)). The table identifies the relevant RAO provisions and links to relevant PLC resources.
Broadly, there are two types of exclusion applicable to regulated activities:
Exclusions that apply to particular regulated activities (specific exclusions) (see Practice note, Regulated Activities Order: exclusions (www.practicallaw.com/9-505-1674)).
Exclusions that apply to several regulated activities (general exclusions) (see Practice note, Regulated activities: general exclusions (www.practicallaw.com/3-202-1612) and Checklist: RAO exclusions relevant to carrying on investment services and activities (www.practicallaw.com/9-203-0581)).
For more information about the business test and the Financial Services and Markets Act 2000 (Carrying on Regulated Activities by Way of Business) Order 2001 (SI 2001/1177), see Practice note, Regulated activities: the business order (www.practicallaw.com/7-201-8783).
Only regulated activities carried on in the UK fall within the territorial scope of FSMA. For more information, see Practice note, Regulated activities: territorial scope (www.practicallaw.com/4-505-8611).
An exempt person is exempt from the general prohibition in relation to one or more regulated activities. The following are exempt persons under section 417(1) of FSMA:
Persons exempt as a result of an exemption order.
Recognised investment exchanges (RIEs).
Recognised clearing houses (RCHs).
For more information about exempt persons, see the following resources:
While members of Lloyd's and members of the professions are not exempt persons, they are persons to whom the general prohibition does not, in certain circumstances, apply (sections 316 and 327, FSMA). Under section 316 of FSMA, unless the FCA or the PRA has made a direction that it should apply, the general prohibition is disapplied in relation to any regulated activity carried on by a member of Lloyd's relating to contracts of insurance written at Lloyd's. Under section 327 of FSMA, professional firms may carry on certain regulated activities (exempt regulated activities) without breaching the general prohibition provided that certain conditions are satisfied. For example, the firm must be a member of a profession or controlled or managed by one or more such members.
For further details on professional firms, see Practice note, Designated professional bodies (www.practicallaw.com/5-202-2253).
For information about applying to the FCA or the PRA for authorisation, see:
For information about varying or cancelling a firm' Part 4A permission, see:
For information about recent developments relating to regulated activities, see:
The PLC Financial Services regulated activities topic index (www.practicallaw.com/2-201-5211) which contains a list of resources on regulated activities.