The Financial Conduct Authority (FCA) regulates financial services in the UK. Services include, among other things, advice on investment products, the promotion of investment products (‘financial promotions’) and the investment products themselves.
Where a service is regulated by the FCA, in most circumstances companies and the individuals they employ or sub-contract to (Appointed Representatives) must be authorised to do so (view our Senior Managers & Certification Regime (SMCR) service). Financial services that are regulated by the FCA are often described as being ‘within the perimeter’. The perimeter stems from the Financial Services & Markets Act 2000, which sets out the scope of the FCA’s regulatory power.
But there are also investment products and the activity that goes hand in hand with them (such as advising and promoting) that are not regulated by the FCA (‘unregulated’). As a result, companies and individuals supplying unregulated financial services do not need authorisation from the FCA to undertake their activities.
This is not to be confused with companies and individuals who conduct regulated activity (ie. are within the perimeter) but are not authorised (‘unauthorised business’).
It must be stressed that there is nothing unlawful about promoting and selling such investment products. However, companies and individuals operating in the unregulated financial services sector can sometimes have difficulty managing client relationships due to the complexity of the FCA’s regulation of the financial services sector.
A good example of this is the requirement for one aspect of a companies’ activity to be regulated, such as financial promotion, because it involves promoting a regulated investment product, but other financial promotion activity it undertakes is unregulated because it involves an unregulated investment product. There is also the specific position in relation to crypto-assets (‘crypto currency) (view our Money Laundering Regulations service). Crypto currency is an unregulated investment product but since the 10th January 2020 the FCA has been the anti-money laundering supervisor for businesses that sell crypto assets.
Our team includes experienced practitioners who have defended companies and individuals under criminal and regulatory investigation by the FCA in relation to unregulated activity and unauthorised business. In addition, our head of Financial Services Regulation was previously employed by the FCA enforcement division and advised on criminal and regulatory investigations into companies and individuals in relation to unregulated activity and unauthorised business.
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