Regulated financial services activities

Updated 14 June 2017

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What you need to do

If you are a COLP or a nominated authorised signatory for a firm we regulate, you need to let us know whether or not your firm carries out financial activities for clients as part of your legal work.

Please report this information – by logging in and completing your online form.

Why this information is important

Any organisation that carries out regulated financial services activities must be listed on the relevant Financial Conduct Authority (FCA) register.

If your firm carries out regulated financial services activities under our regulation through an FCA exemption, you need to tell us about what you do so that we can provide accurate information to the FCA.

If you do provide financial services, being on the FCA register is important. Other businesses – such as lenders or credit agencies – might refuse to work with you if they cannot verify that you are regulated or are exempt to carry out such activities.

We are asking for this information now as our analysis shows that reporting during our annual firm licence and practising certificate renewal exercise is inconsistent, and some firms do not realise that what they are doing includes work that is regarded as a financial services activity. It's a complex area, and the information we keep on record must be correct.

Find out things you need to know to help you report this information.

Your questions

What are regulated financial services activities?

The regulated financial services activities are set out and explained in Part 2 of The Financial Services and Markets Act 2000 (FSMA) and include:

  • dealing in, arranging, advising on, assisting in the administration of, and making arrangements with a view to carry out, contracts of insurance
  • consumer credit activities
  • setting up stakeholder pension schemes
  • investments: advising, dealing in or managing, arranging deals, safeguarding and administering
  • setting up collective investment schemes
  • home finance – mortgages: arranging, advising on, entering into and administering
  • providing basic advice on stakeholder products
  • Lloyd's market activities
  • operating a multilateral trading facility
  • sending dematerialised instructions (electronic transfer of title in investments like securities and contractually based investments)
  • entering funeral plan contracts
  • issuing e-money
  • agreeing to do most of the above activities.

The FCA provides a complete list of the regulated financial services activities in its Handbook glossary.

How can law firms carry on financial services activities?

The Financial Services and Markets Act 2000 (FSMA) allows firms to carry out certain financial activities, if they are:

  • Authorised and regulated by the FCA (known as Authorised Professional Firms) or they become an appointed representative of another FCA firm.
  • Authorised and regulated by a Designated Professional Body (DPB), such as the SRA, under Part 20 of FSMA (known as an exempt professional firm (EPF)).
  • Able to rely on a statutory exclusion, meaning that the activity is not a regulated financial activity. For example, certain consumer credit activities, such as debt collecting, will be excluded from regulation under FSMA where the activities are undertaken by solicitors (or other persons authorised under the Legal Services Act 2007) in the course of providing advocacy services or litigation services.
 

As a firm you need to determine whether or not you need to be authorised by the FCA or can rely on Part 20 of FSMA.

What is Part 20?

Part 20 of FSMA makes a special provision for professional firms that do not carry out mainstream financial services activities, but which carry on regulated financial services activities (known as exempt regulated activities) in the course of other work, such as conveyancing, matrimonial, personal injury and trust work.

Can I be authorised by the FCA and rely on Part 20 of FSMA at the same time?

No. Firms cannot be authorised by both the FCA and a DPB at the same time. You are either authorised or exempt. Depending on how you carry on financial services activities will determine which camp you fall in.

How does Part 20 apply?

Part 20 has two key provisions relevant to SRA-authorised firms:

  • FSMA - regulated activities may be carried out by a member of the profession who is not authorised by the FCA where the regulated activity "...arises out of, or is complementary to, the provision of a particular professional service to a particular client..." (s332(4) of FSMA)
  • the regulated activity "...must be incidental to the provision by him of professional services..." (s327(4) of FSMA).

So, for example, you might have:

  • arranged for after the event insurance for a personal injury or conveyancing client
  • provided debt counselling in respect of joint credit card debts in a matrimonial matter
  • advised a client on how they should invest monies when advising on a will or probate matter.

As the financial services activities arise out of or are complementary to the service you provide to your client, and are incidental to the firm's legal/professional activities, you will be able to rely on Part 20 and, therefore, fall into the category of an EPF.

How is Part 20 engaged?

For firms to be able to rely on Part 20, we must have rules that govern the carrying out of regulated financial services activities by EPFs. These are:

The SRA Financial Services (Scope) Rules 2001 set out the scope of the financial services activities which may be undertaken by EPFs.

What do the rules do?

The rules specifically:

  • prohibit firms that are not authorised and regulated by the FCA from carrying on certain regulated activities
  • set out the basic conditions firms must satisfy when carrying out any regulated activities
  • set out other restrictions on regulated activities carried on by those firms.

If you undertake a regulated activity that falls outside the scope of our regime, and you are not authorised by the FCA, you may be committing a criminal offence. It is therefore imperative that you understand the activities which may be undertaken when relying on our rules and those which may not.

The COB Rules regulate the way in which firms carry out such exempt regulated activities - there are some key requirements that firms have to comply with if they carry on insurance mediation activities or consumer credit activities.

The Scope and COB Rules should be considered in parallel with obligations set out in the SRA Principles and the SRA Code of Conduct.

Are there any tools to help me assess if my firm can rely on Part 20?

Yes. You can go through our decision tree to help you assess whether or not you can rely on Part 20.

What else do I need to do?

If, on your assessment, you are satisfied that you can rely on Part 20 (as an EPF) and comply with the SRA's Scope and COB Rules, then you should notify us and confirm the financial activities that the firm carries on.

If you arrange or advise on an insurance product for your client, your firm will need to have appointed an insurance mediation officer (IMO) and told us who that person is. The IMO does not need to be approved by us as a role holder and, in most firms, the person will be the firm's Compliance Officer for Legal Practice (COLP).

Why do I need to let you, the SRA, know?

The FCA maintains a published register, which includes details about firms it authorises and EPFs.

We and other DPBs provide information to the FCA on a weekly basis, which is then used to update the register.

In addition, as a DPB, we are obliged to keep the FCA informed about the way in which we supervise and regulate EPFs. We must provide the FCA with "...the number of exempt professional firms..." and "...the range and scope of exempt regulated activities carried on by its exempt professional firms...".

What is the purpose of this register?

The register assists the public and businesses to find out whether a firm they are using, or plan to use, is authorised, registered by the Prudential Regulation Authority (PRA) and/or FCA, or is exempt.

Do corporate partners in a firm have to complete the questionnaire?

Yes. How corporate partners work and the activities they carry on is varied. So if the corporate partners are authorised bodies in their own right then they should respond to the questionnaire.

Financial Services Activities Data Collection preview

The questions in our online Financial Services Activities Data Collection questionnaire are set out below for you to preview or print.

We encourage you to read the questions below carefully before you log in and complete our online questionnaire, especially if you firm is not authorised by the Financial Conduct Authority, and you think your firm does carry on financial services activities.

Please do not attempt to complete or submit the form below. It is a specimen only.

Firms that carry on financial services activities may need to be authorised to do so

You may be undertaking financial services activities that fall within the scope of The Financial Services and Markets Act 2000 (FSMA) requirements without realising it. For example, if you invoice the client and allow them time to pay then this may amount to a financial service activity.

FSMA allows firms to carry on financial services activities only if they are:

  • authorised and regulated by the Financial Conduct Authority (FCA) (known as Authorised Professional Firms) or they become an appointed representative of another FCA firm; or
  • regulated by a Designated Professional Body (DPB) such as the SRA, under Part 20 of FSMA (these firms are known as Exempt Professional Firms (EPF)); or
  • able to rely on a statutory exclusion, meaning that the activity is not a regulated financial services activity.

A full list of the financial services activities can be found in the FCA Handbook. You can also read our online guidance on the SRA website.

We need to know if you are carrying on any of these financial services activities and ensure that we are providing the correct information to the FCA.

Does your firm carry on any financial services activities?

Yes

Continue through questionnaire

No

Go to declaration and end of questionnaire

FCA authorisation

Your firm may already be authorised and regulated by the FCA. Being FCA authorised is not the same as being registered as an EPF. You cannot be both at the same time. Only choose "yes" if you have obtained authorisation directly from the FCA.

Is your firm authorised by the FCA?

Yes

Provide FCA authorisation number, go to declaration and end of questionnaire

No

Continue through questionnaire

Financial services activities

We will be covering other financial services activities later in the questionnaire. The activities your firm carries on may not be in the list below. The full list is found in the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (SI 2001/544).

From the list below, does your firm carry on any of the activities above (this is not an exhaustive list)?

You do not need to indicate any specific activities, if your firm carries on any of these activities.

Yes

Your answer indicates that your firm may need FCA authorisation.

How does the firm intend to carry on financial services activities in the future?

  • We rely on a statutory exclusion or intend to seek FCA authorisation.
  • We intend to stop or change the way we carry on financial services activities.

Whichever is selected, then go to declaration and end of questionnaire

No

Continue through questionnaire

  • Acting as trustee or depositary of undertakings for collective investment in transferable securities (UCITS)
  • Acting as trustee or depositary of an alternative investment fund (AIF)
  • Administering a home purchase plan
  • Administering a home reversion plan
  • Administering a regulated mortgage contract
  • Administering a regulated sale and rent back agreement
  • Advising on conversion or transfer of pension benefits
  • Advising on regulated credit agreements for the acquisition of land
  • Advising on syndicate participation at Lloyd's
  • Arranging deals in contracts of insurance written at Lloyd's
  • Bidding in emissions auctions
  • Carrying out contracts of insurance
  • Dealing in investments as principal
  • Effecting contracts of insurance as principal
  • Entering as provider into a funeral plan contract
  • Entering into a home purchase plan
  • Entering into a home reversion plan
  • Entering into a regulated consumer hire agreement as owner
  • Entering into a regulated sale and rent back agreement
  • Establishing, operating or winding up a collective investment scheme
  • Establishing, operating or winding up a personal pension scheme
  • Establishing, operating or winding up a stakeholder pension scheme
  • Exercising, or having the right to exercise, the owner's rights and duties under a regulated consumer hire agreement
  • Issuing electronic money
  • Managing UCITS
  • Managing an AIF
  • Managing the underwriting capacity of a Lloyd's syndicate as a managing agent at Lloyd's
  • Operating a multilateral trading facility
  • Operating an electronic system in relation to lending
  • Providing basic advice on stakeholder products
  • Providing credit references
 

The remaining questions are about carrying on financial services activities as an EPF

Part 20 of FSMA makes special provision for professional firms which may carry on regulated financial services activities (known as exempt regulated activities), in the course of other work (such as conveyancing, matrimonial, personal injury and trust work).

Part 20 has two key provisions relevant to SRA-authorised firms. FSMA regulated activities may be carried on by a member of the profession who is not authorised by the FCA where the regulated activity: - "... arises out of, or is complementary to, the provision of a particular professional service to a particular client..." (s332(4) of FSMA): and - the regulated activity "...must be incidental to the provision by him of professional services..." (s327(4) of FSMA).

Some of the regulated financial services activities also contain specific exclusions. If an exclusion applies and all the conditions of that exclusion are met then your firm would not require FCA authorisation or need to rely on Part 20 of FSMA to carry on that activity. For example, there is an exclusion that applies where your firm, or an individual within your firm, carries on certain activities in its capacity as a trustee/personal representative (see article 66 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001). In some cases it may not be possible for your firm to meet all the conditions of an exclusion and your firm may need to carry on the activity under Part 20 of FSMA.

From the list below, "tick" if your firm, or any individual within the firm, carries on any of the activities in its capacity as a trustee/personal representative and the other party is a beneficiary under the trust, will or intestacy.

If none applies or you rely on a statutory exclusion, you do not need to tick any activities.

  • Entering into a regulated mortgage contract as lender
  • Making arrangements with a view to a home purchase plan
  • Making arrangements with a view to a home reversion plan
  • Making arrangements with a view to a regulated sale and rent back agreement
  • The firm (or an individual within the firm) is carrying on one or more of the above activities but not in the capacity of a trustee/personal representative where the other party is a beneficiary under the trust, will or intestacy.

Tick any of the options and continue through questionnaire

From the list below, "tick" if your firm carries on any of the activities acting as lender, where the loan to the client is for fees and disbursements due to the firm.

If none applies you do not need to tick any activities.

  • Entering into a regulated credit agreement as lender
  • Exercising, or having the right to exercise, the lender's rights and duties under a regulated credit agreement
  • The firm is carrying on one or more of the above activities but not in respect of our fees or disbursements.

Tick any of the options and continue through questionnaire

From the list below, "tick" if your firm endorses recommendations given by an authorised person or an exempt person in relation to the following.

If none applies you do not need to tick any activities.

  • Entering as home purchaser into a regulated home purchase plan with a particular person
  • Entering as reversion seller or plan provider into a regulated home reversion plan with a particular person
  • Entering as agreement seller or agreement provider into a regulated sale and rent back agreement with a particular person
  • Entering as borrower into a regulated mortgage contract
  • The firm gives its own recommendations in respect of one or more of the above.

Tick any of the options and continue through questionnaire

From the list below, "tick" if your firm carries on any of the activities as part of the legal/professional work you do for particular clients, and this is incidental to the firm's provision of professional services.

If none applies you do not need to tick any activities.

  • Administering a specified benchmark
  • Advising on investments
  • Advising on peer to peer (P2P) agreements
  • Arranging (bringing about) a home purchase plan
  • Arranging (bringing about) a home reversion plan
  • Arranging (bringing about) a regulated sale and rent back agreement
  • Arranging (bringing about) deals in investments
  • Arranging (bringing about) regulated mortgage contracts
  • Dealing in investments as agent
  • Managing dormant account funds (including the investment of such funds)
  • Managing investments
  • Meeting of repayment claims
  • Providing information in relation to a specified benchmark
  • Making arrangements with a view to transactions in investments
  • Carrying on insurance mediation activities*
  • The firm does carry on one or more of the above activities but this is not as part of the legal/professional work the firm does for particular clients, and/or is not incidental to the firm's provision of professional services.

* You have indicated that your firm carries on insurance mediation activities so you must have an Insurance Mediation Officer (IMO) responsible for overseeing this work (see SRA Financial Services (Scope) Rules 2001 5.6(b)). You must nominate a member of the firm's management structure to hold this role. The name of the IMO will be included on the FCA's register in relation to exempt professional firms carrying on insurance mediation activities.

Please provide the full name of your Insurance Mediation Officer and their SRA number.

Tick any of the options and continue through questionnaire

From the list below, "tick" if your firm carries on any of the credit-related activities as part of the legal/professional work you do for particular clients, and this is incidental to the firm's provision of professional services.

If none applies you do not need to tick any activities.

  • Credit broking
  • Debt adjusting
  • Debt counselling
  • Debt collecting
  • Debt administration
  • Providing credit information services
  • The firm does carry on one or more of the above activities but this is not as part of the legal/professional work the firm does for particular clients, and/or is not incidental to the firm's provision of professional services.

Tick any of the options and continue.

Declaration and end of questionnaire

Help deciding

Do you need to be authorised by the Financial Conduct Authority or are you an Exempt Professional Firm?

If you think your firm might be carrying out regulated financial services activities, you can use our interactive decision tool to help you decide what kind of authorisation you need.

or Download decision tree (PDF 1 page, 84K)

Do you need to be authorised by the Financial Conduct Authority or are you an Exempt Professional Firm?  - Flow chartRegulated activitiesPart 3Section 22Part 2Scope RulesScope RulesCOB Rules

Are you, or will you be, carrying on a regulated financial activity, or involved with specific investments?

(see definition of regulated activities and Part 3 of the Regulated Activities Order)

Are you carrying on the regulated financial activity by way of a business?

(see section 22 of FSMA and PERG5.4)

Is the activity excluded from regulation?

(see Part 2 of the Regulated Activities Order)

Is the regulated financial activity a prohibited activity or do restrictions apply?

(see SRA Financial Services (Scope Rules) 2001)

Is the regulated financial activity carried out by the firm in a manner which is incidental to the provision of legal services?

Can you demonstrate that in providing a particular professional service to a particular client, the regulated financial activities arise out of, or are complimentary, to that service?

You’ll be regarded as an exempt professional firm and must comply with the SRA’s regulatory arrangements

(Scope Rules and COB Rules). If you carry on insurance mediation activities, you will also need to appoint an insurance mediation officer.

FCA authorisation not required

 

FCA authorisation required

 

Examples

Listed below under relevant areas of legal practice are a range of examples of SRA-regulated financial services activities that your firm might carry on. If your firm does carry on any of these activities, you need to let us know when you complete the online form. Your firm will be registered as an exempt professional firm under Part 20 of the Financial Services and Markets Act 2000. The list is not comprehensive.

Practice area
Arbitration and alternative dispute resolution (ADR)
Financial services activity
Administering a specified benchmark
Example
You are involved in a long standing commercial dispute between two companies and act for one who is concerned about how certain investments were managed. In order to progress matters and help reach a settlement you agree that you will collect, analyse and process information provided for the purpose of determining a specified benchmark for example, Sterling Overnight Index Average (SONIA); Repurchase Overnight Index Average (RONIA); WM/Reuters.
Practice area
Criminal
Financial services activity
Debt counselling
Example
You act for a client that has outstanding debts and they ask for advice on how their debts could be consolidated before they are sentenced.
Practice area
Employment
Financial services activity
Credit broking
Example
After discussing fee arrangements with your client, you refer the client to a lender who provides the client with funds to pay your firm's fees and then repays the lender by instalments.
Practice area
Family/matrimonial litigation
Financial services activity
Advising on investments
Example
You are acting for a client in divorce proceedings and you advise on the transfer of shares in a company (private or public).
Practice area
Immigration
Financial services activity
Arranging (bringing about) regulated mortgage contracts
Example
Your client has recently been granted indefinite leave to remain in the UK and seeks assistance in establishing himself and securing a place to stay. You approach a mortgage broker on behalf of your client with a view to making arrangements for your client to enter into a regulated mortgage contract as borrower.
Practice area
Litigation
Financial services activity
Advising on peer to peer (P2P) agreements
Example
You have been instructed by a client that does not qualify for legal aid and other fee arrangements are not suitable. You advise the client that other sources of funding should be considered. The client advises that he wishes to set up an online crowd-funding platform and asks you to advise on the terms and conditions.
Practice area
Personal injury
Financial services activity
Carrying on insurance mediation activities
Example
Your client has been involved in an accident at work and when funding arrangements are discussed it is noted that funds might not be available to cover third party costs in the event that the claim is unsuccessful. You discuss options with your client and arrange for an after-the-event (ATE) insurance policy to be put into place.
Requirement for role holder
Firm will need to ensure that they have appointed an insurance mediation officer before they carry on the activity
Practice area
Planning
Financial services activity
Entering into a regulated credit agreement as lender (where the loan to the client is for fees and disbursements due to the firm)
Example
Your are involved in seeking planning permission for your client so that properties can be built on what is currently classed as a conservation area. You have agreed with your client that your firm's fees will be paid in stages including the payment of disbursements. You bill your client however, they advise that they cannot pay. You agree to make a loan to your client so that fees can be paid for and enter into a regulated credit agreement.
Practice area
Property (conveyancing)
Financial services activity
Carrying on insurance mediation activities
Example
You are instructed on the sale of a property and during the course of the retainer you advise your client there may be issues that could impact on effective transfer of title to the buyer. You agree with the client that you will arrange for a defective title/restrictive covenant indemnity insurance policy to ensure that your client can sell with good title. Sometimes a purchaser will require an indemnity insurance policy as it a condition of their mortgage.
Requirement for role holder
Firm will need to ensure that they have appointed an insurance mediation officer before they carry on the activity
Practice area
Wills, trusts and tax planning
Financial services activity
Making arrangements with a view to a home reversion plan
Example
You act as a trustee and on behalf of the beneficiaries you have been asked to administer a home reversion plan. This is a type of equity-release scheme that lets the seller (the beneficiaries) use some of the money that’s tied up in their home. These plans are used for example, to pay for long-term care where the seller is looking to stay in the home.

Who to contact

For more guidance on regulated financial services activities, contact our Professional Ethics helpline.

Get help logging in from our contact centre.

Please use www.sra.org.uk/financial to link to this page.

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