• Doing business with the FSA
  • Small Firms
    • Authorised professional firms
      • Regulated activities

An authorised professional firm (APF) is an FSA-authorised person that is:

• an individual who is entitled to practice a profession under the rules of a designated professional body (DPB); or is
• controlled and managed by one or more such individuals (in the case of a partnership or corporate entity).

There are ten DPBs:

• The Law Society of England and Wales
• The Law Society of Scotland
• The Law Society of Northern Ireland
• The Institute of Chartered Accountants in England & Wales
• The Association of Chartered Certified Accountants
• The Institute of Chartered Accountants in Scotland
• The Institute of Chartered Accountants in Ireland
• The Council of Licensed Conveyancers
• The Institute of Actuaries
• Royal Institution of Chartered Surveyors

The regulated activities that APFs can carry on depend on the scope of their Part IV permission, and can be divided into two types:

• 'mainstream' regulated activities; and
• 'non-mainstream' regulated activities.

What are 'mainstream' regulated activities?

‘Mainstream' regulated activity is not a defined term in the FSA Handbook, but means:

• a regulated activity that the APF carries out on a stand-alone basis, unconnected with a professional service, as is the case with ‘ordinary’ authorised firms (so these activities are like those a typical investment firm or insurance or mortgage intermediary provides and are subject to the same degree of regulation); and
• a regulated activity connected with a professional service but which does not satisfy the conditions for qualifying as a 'non-mainstream' regulated activity (see below).

What are non-mainstream regulated activities?

Non-mainstream regulated activities (NMRAs) are exclusive to APFs as there must be a professional, non-regulated service involved. Just as members of a profession that are not directly authorised by the FSA Exempt Professional Firms (EPFs), APFs will inevitably carry on certain regulated activities that arise out of or are complementary to their professional services. For APFs these are defined as NMRA. The NMRA regime ensures a level playing field between APFs and exempt professional firms when carrying on regulated activities on a similar basis.

NMRAs must meet the conditions set out in PROF 5.2.1R. In particular:

• the APF cannot receive from anyone except its client, any pecuniary reward or advantage which it does not account to its client from carrying on the regulated activity; and
• exempt professional firms who are members of the same DPB as the APF must be permitted to carry on the regulated activity under the rules of the DPB.

Under Part XX of the Financial Services and Markets Act 2000 (the Financial Services and Markets Act 2000 (Professions) (Non-Exempt Activities) Order 2001 as amended), certain regulated activities cannot be carried out on a non-mainstream basis (and exempt professional firms cannot carry these on at all). For example, dealing as principal in investments or mortgage lending cannot be a NMRA. Also, there are other regulated activities that can only be a NMRA in limited circumstances, such as advising on investments.

Most of the FSA Handbook is disapplied in relation to NMRAs. This means that these firms are subject to a 'lighter touch' regime than those carryng on mainstream regulated activities.

Back to top