Only an authorised person or an exempt person may carry on a regulated activity in the United Kingdom. Under section 31(1) an authorised person is described as:
A limited company can be an authorised person.
An exempt person may be exempt because of who he/she is, e.g. the European Community or the Act specifies him/her as being exempt. The official receiver is an exempt person.
Any person who carries on, or purports to carry on, a regulated activity who is not an authorised person or an exempt person is guilty of an offence punishable by imprisonment or a fine or both. In addition, agreements entered into by them in the course of or in consequence of the illegal activity will be unenforceable against the other party, subject to the court’s discretion to permit enforcement. In addition, the other party is entitled to recover any money or other property paid or transferred by him/her under the agreement and compensation for any loss sustained by him/her as a result of having parted with it. Also any person who in the course of business communicates an invitation or inducement to engage in investment activity and is not an authorised person is guilty of an offence punishable by imprisonment or a fine, or both. Where the official receiver considers that an offence has been committed, he/she should report it to Prosecution Section and should also advise the FSA direct (see paragraph 80.31).Notes: [s19 and s31(1)] [Part IV] [s38] [s26, s27 and s28] [s25]
80.6 Regulated activities
The core of the Act is the regulated activities. Section 22(1) states that an activity is a regulated activity if it is an activity specified in an order made by HM Treasury and which is carried on by way of business and relates to an investment (including any asset, right or interest) of a specified kind, or is carried on in relation to property of any kind.
The Act, Schedule 2, lists in general terms the regulated activities. The following activities are included:
The Act, Schedule 2 Part II, also lists in general terms the regulated investments. The schedule includes:
The Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, (SI 2001 No. 544) also specifies categories of regulated activities (see Annex B). This order is amended from time to time to reflect the regulation of new categories of activity, but an up to date version of the Order can be found on the HM Treasury website, www.hm-treasury.gov.uk.
The Act pays particular attention to the marketing of financial services. Section 21(1) prohibits a person, in the course of business, from communicating ‘an invitation or inducement to engage in investment activity’. The general prohibition does not apply to an authorised person or if an authorised person approves the content of the communication. Breach of this financial promotion restriction may lead to imprisonment, a fine or both.Notes: [s21] [s25(1)]