A guide to Practical Law's materials on regulated activities. It includes information about the general prohibition, which is set out in section 19 of the Financial Services and Markets Act 2000 (FSMA), and the specified investments and activities set out in the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (SI 2001/544) (RAO).
Scope of this note
It is important for a firm to establish if it is carrying on a regulated activity as, if it is, it will need to be authorised by the FCA or the PRA. This note provides a guide to Practical Law's materials on regulated activities.
General prohibition
Section 19 of the Financial Services and Markets Act 2000 (FSMA) states that a person (which includes a body corporate) must not carry on a regulated activity in the UK, or purport to do so, unless they are an authorised or exempt person. This is referred to as the general prohibition. Carrying on a regulated activity in breach of the general prohibition is a criminal offence and may result in certain agreements being unenforceable.
Generally, an activity is a regulated activity if it is an activity of a specified kind that is carried on by way of business and relates to a specified investment or property of any kind (section 22, FSMA). The definition is extended to include certain activities relating to, among others, benchmarks and claims management companies.
Exclusions are conditions that turn normally regulated activities into unregulated ones. Therefore, if a firm falls within scope of a regulated activity's exclusion, it will not need authorisation to carry on that regulated activity.
For an activity to be a regulated activity under FSMA, it must be carried on by way of business (section 22, FSMA). This is commonly referred to as the business test.
An exempt person is exempt from the general prohibition in relation to one or more regulated activities. The following are exempt persons as set out in section 417(1) of FSMA:
Under section 327 of FSMA, professional firms may carry on certain regulated activities (referred to as 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.
If a person is carrying on a regulated activity, by way of business, in the UK and they do not fall within an exclusion or exemption, they must be authorised by the FCA or the PRA.
For information about applying to the FCA or the PRA for authorisation, or varying or cancelling a firms' permission under FSMA, see:
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