Do I need to be authorised?

In this section:

Doing business with us
- Do I need to be authorised?
  - Sensitive business names

Related information

How to I get authorised?

How do I cancel my authorisation?

Perimeter Guidance Manual (PERG)

List of tailored Handbooks

Related external information

You can find up-to-date copies of Legislation (e.g. FSMA, RAO, FPO) at:

Authorisation explained

The Financial Services & Markets Act 2000 (FSMA)

FSMA is concerned with the regulation of financial services and markets in the UK . Under Section 19 of FSMA, any person who carries on a regulated activity in the UK must be authorised by the FSA or exempt (an appointed representative or some other exemption). Breach of section 19 may be a criminal offence and punishable on indictment by a maximum term of two years imprisonment and/or a fine.

A copy of FSMA, as well as secondary and related legislation, can be found on the Treasury's website. Bear in mind that this version of FSMA does not include amendments made to it by subsequent legislation.

Does my firm need to be authorised?

You need to establish whether your firm's proposed business requires you to apply for authorisation to carry on regulated activities. For most smaller firms, this would typically include intermediaries selling investments and/or home finance activities and/or general insurance.

For each regulated activity you must also identify with which investment type your activities will be concerned.

The activities and specified investments are detailed in The Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (RAO), which is secondary legislation under FSMA.

What are the regulated activities?

Specified activities are defined in Part II of the RAO and comprise:

accepting deposits;
issuing e-money;
effecting or carrying out contracts of insurance as principal;
dealing in investments (as principal or agent);
arranging deals in investments;
arranging home finance activities;
operating a multilateral trading facility;
managing investments;
assisting in the administration and performance of a contract of insurance;
safeguarding and administering investments;
sending dematerialised instructions;
establishing etc collective investment schemes;
establishing etc stakeholder pension schemes;
providing basic advice on stakeholder products;
advising on investments;
advising on home finance activities;
Lloyd's market activities;
entering funeral plan contracts;
entering into a home finance activity;
administering a home finance activity;
agreeing to do most of the above activities.

Specified investments are defined in Part III of the RAO and comprise:

deposits;
electronic money;
rights under a contract of insurance;
shares etc;
instruments creating or acknowledging indebtedness;
sukuk (shariah compliant debt instruments)
government and public securities;
instruments giving entitlement to investments;
certificates representing certain securities;
units in a collective investment scheme;
rights under a stakeholder pension scheme;
rights under personal pension scheme;
options;
futures;
contracts for differences;
Lloyd's syndicate capacity and syndicate membership;
rights under funeral plan contracts;
rights under regulated mortgage contracts;
rights under a home reversion plan;
rights under a home purchase plan;
Rights to or interests in anything that is a specified investment listed, excluding 'Rights under regulated mortgage contracts', 'Rights under regulated home reversion plans' and Rights under regulated home purchase plans'.

For smaller firms, we have developed several standard permission profiles containing regulated activities and investment types. You can find these in the application packs. If none of these profiles match the business that you want to do, you will need to construct your own.

The activities and specified investment types we regulate are described in greater detail in chapter 2 of the Perimeter Guidance Manual (PERG).

‘Do I need to be authorised?’ Decision Tree

Business test

Under section 22 of the FSMA, for an activity to be a regulated activity, it must be carried on 'By way of business'.

FSA guidance on the business element can be found in PERG 2.3.

Exclusions

Exclusions are provisions that turn activities that would otherwise be regulated activities into unregulated activities. So if you can rely on an exclusion for an activity, you would not require FSA authorisation to carry it out.

Examples of exclusions include:

Introducer exclusion
Overseas Persons exclusion

Who is exempt from authorisation?

A person who is an appointed representative is exempt from authorisation. Further information can be found in the factsheet ‘Becoming an appointed representative’. Other exemptions include:

a professional firm (i.e. a firm of solicitors, accountants or actuaries) carrying on certain regulated activities that are incidental to its main business; or
a local authority or certain kind of housing body carrying on insurance mediation or mortgage activities.

Financial promotions

A financial promotion is an invitation or inducement to engage in investment activity. Investment activity is defined under section 21(8) FSMA as:

(a) entering or offering to enter into an agreement the making or performance of which by either party constitutes a controlled activity; or

(b) exercising any rights conferred by a controlled investment to acquire, dispose of, underwrite or convert a controlled investment.

Under section 21 of FSMA, an unauthorised person may not communicate a financial promotion in the UK , in the course of business, unless either:

(1) its contents are approved for the purposes of section 21 by an authorised person or (2) it is subject to an exemption under the Financial Services & Markets Act 2000 (Financial Promotion) Order 2005 (FPO).

Controlled activities and controlled investments are prescribed under Schedule 1 of the FPO and include such things as buying shares or bonds, selling insurance and managing investments.

You can find further guidance on financial promotions in PERG 8.

How do I get authorised?

Any person wishing to carry on one or more regulated activities, by way of business, must apply to us for authorisation (unless they can abide by the terms of exclusion or are exempt).

For further details on the process of applying for authorisation please see How do I get authorised?

Money Laundering Regulations 2007 (MLR)

The FSA is also responsible for the registration of firms that conduct activities under Annex 1 of the Banking Coordination Directive (BCD), in addition to firms authorised by the FSA under FSMA. The activities are also listed in The FSA’s new role under the Money Laundering Regulations 2007: Our Approach [PDF].

Further information can be located at: Money Laundering Regulations 2007 (MLR)

Payment Services Regulations 2009 (PSRs)

The Payment Services Directive (PSD) aims to provide a common regulatory approach to the provision of electronic payment services. It came into force in the UK on 1st November 2009 through the PSRs.

For further information please see:

Guidance on the scope of the Payment Services Regulations (PERG 15)

Payment Services Regulations

Electronic Money Regulations 2011 (EMRs)

The EMRs, which implements the second Electronic Money Directive (2EMD) in the UK, came into force on 30 April 2011. 2EMD aims to encourage the growth of the electronic money market.