The SRA, through the Law Society, is a designated professional body under Part 20 of FSMA. This means that firms (including sole practices) authorised by us may carry on certain regulated financial services activities without being regulated by the FCA if they can meet the conditions in section 327 of FSMA.
The SRA Financial Services (Scope) Rules set out the scope of the regulated financial services activities that may be undertaken by firms authorised by us and not regulated by the FCA. These rules regulate the way in which firms carry on such exempt regulated financial services activities and the way in which firms that are dually regulated by us and the FCA carry on their non-mainstream regulated activities.
These rules do not apply to solicitors, RELs and RFLs practising outside firms that are authorised by us.
This introduction does not form part of the SRA Financial Services (Conduct of Business) Rules.
and references to "you" in these rules should be read accordingly.
Where an authorised body is a licensed body, these rules apply only in relation to the activities regulated by the SRA in accordance with the terms of the body's licence.
Notwithstanding the wider information obligations in the SRA Codes of Conduct, you must give the client the following information in writing in a manner that is clear, fair and not misleading before providing a service which includes the carrying on of a regulated financial services activity and in good time before the conclusion of a contract of insurance:
a statement that you are not authorised by the FCA;
"[This firm is]/[We are] not authorised by the Financial Conduct Authority. However, we are included on the register maintained by the Financial Conduct Authority so that we can carry on insurance distribution activity, which is broadly the advising on, selling and administration of insurance contracts. This part of our business, including arrangements for complaints or redress if something goes wrong, is regulated by the Solicitors Regulation Authority. The register can be accessed via the Financial Conduct Authority website at www.fca.org.uk/firms/financial-services-register."
You must ensure that where you have agreed or decided in your discretion to effect a transaction, you must do so as soon as possible, unless you reasonably believe that it is in the client's best interests not to.
Where you receive instructions from a client to effect a transaction, or make a decision to effect a transaction in your discretion, you must keep a record of:
Where you undertake the regulated financial services activity of safeguarding and administering investments, you must operate appropriate systems, including the keeping of appropriate records, which provide for the safekeeping of assets entrusted to you by clients and others.
the procedures allowing clients and other interested parties to register complaints about you and information about the out-of-court complaint and redress procedures available for the settlement of disputes between you and your clients;
whether you are representing the client or acting for and on behalf of the insurer;
whether you have a direct or indirect holding representing 10% or more of the voting rights or capital in a relevant insurance undertaking;
are not under a contractual obligation to conduct insurance distribution exclusively with one or more insurance undertakings and do not give advice on the basis of a fair and personal analysis, in which case you must provide the names of the insurance undertakings with which you may and do conduct business.
you must give that personal recommendation on the basis of an analysis of a sufficiently large number of insurance contracts available on the market to enable it to make that recommendation; and
that personal recommendation must be in accordance with professional criteria regarding which contract of insurance would be adequate to meet the client's needs.
Prior to the conclusion of a contract of insurance, you must specify on the basis of information obtained from the client, the demands and needs of that client.
The details must be adapted according to the complexity of the contract of insurance proposed and the individual circumstances of the client.
Notwithstanding your complaints handling obligations in the SRA Code of Conduct for Firms, you must have in place and operate appropriate and effective procedures for registering and responding to complaints from a person who is not a client.
in a way that conflicts with their duty to act in each client's best interest.
In particular, you must not make any arrangement by way of remuneration, sales target or otherwise that could provide an incentive to the firm or its employees to recommend a particular contract of insurance to a client when it could offer a different contract of insurance which would better meet its client's needs.
In good time before the conclusion of the initial contract of insurance and if necessary, on its amendment or renewal, you must provide the client with information:
Where a fee is payable, you must inform the client of the amount of the fee before the client incurs liability to pay the fee, or before conclusion of the contract of insurance, whichever is earlier.
To the extent that it is not possible for the amount in rule 17.1 to be given, you must give the client the basis for its calculation.
This rule applies to all such fees that may be charged during the life of the policy.
Rule 18 applies to all information required to be provided to a client in this Part.
You must communicate information to the client on paper or using any of the following means:
a durable medium other than paper where the following conditions are satisfied:
the use of a durable medium other than paper is appropriate in the context of the business conducted between the firm and the client; and
the client has been given the choice between information on paper and on a durable medium other than paper and has chosen a durable medium other than paper; or
on a website (where it does not constitute a durable medium) where the following conditions are satisfied:
the provision of that information by means of a website is appropriate in the context of the business conducted between you and the client;
the client has consented to the provision of that information by means of a website;
the client has been notified electronically of the address of the website, and the place on the website where that information can be accessed; and
you ensure that the information remains accessible on the website for such period of time as the client may reasonably need to consult it.
For the purposes of rules 18.2(a)(i) and (b)(i), the provision of information using a durable medium other than paper or by means of a website shall be regarded as appropriate in the context of the business conducted between you and the client if there is evidence that the client has regular access to the internet. The provision by the client of an e-mail address for the purposes of that business is sufficient evidence.
You must communicate the information:
in a clear and accurate manner, comprehensible to the client;
in an official language of the Member State in which the insured risk, or proposed insured risk, is situated or in any other language agreed upon by the parties; and
free of charge.
Where you communicate the information using a durable medium other than paper or by means of a website, you must, upon request and free of charge, send the client a paper copy of the information.
You must ensure that a client's choice or consent to receive the information by means of a website (whether a durable medium or where the conditions under rule 18.2(b) are satisfied) is an active and informed choice or consent.
In the case of services supplied to the client by telephone that are subject to the Financial Services (Distance Marketing) Regulations 2004:
the information must be given in accordance with those regulations; and
When you offer a non-insurance ancillary product or service as part of a package or in the same agreement with an insurance product, you must:
inform the client whether it is possible to buy the components separately and, if so must provide the client with an adequate description of:
the different components;
where applicable, any way in which the risk or insurance coverage resulting from the agreement or package differs from that associated with taking the components separately; and
provide the client with separate evidence of the charges and costs of each component.
When you offer an insurance product ancillary to and as part of a package or in the same agreement with a non-insurance product or service, you must offer the client the option of buying the non-insurance goods or services separately.
Rule 19.2 does not apply where the non-insurance product or service is any of the following:
a payment account as defined in point 3 of Article 2 of Directive 2014/92/EU.
Rule 19 shall not prevent the distribution of insurance products which provide coverage for various types of risks (multi-risk insurance policies).
In the cases referred to in rules 19.1 and 19.2, you must still comply with other provisions in this Part relating to the offer and sale of insurance products that form part of the package or agreement, including specifying the demands and needs of the client in accordance with rule 12.
the firm and each relevant employee possesses appropriate knowledge and ability in order to complete their tasks and perform duties adequately; and
that all the persons in its management structure and any staff directly involved in insurance distribution activities are of good repute.
In considering a person's good repute, you must as a minimum ensure that the person:
has a clean criminal record or any other national equivalent in relation to serious criminal offences linked to crimes against property or other crimes related to financial activities; and
has not previously been declared bankrupt,
unless they have been rehabilitated in accordance with national law.
You must ensure that the client is given objective and relevant information about a policy in good time prior to the conclusion of the policy, so that the client can make an informed decision.
You must provide the information in rule 21.1 to the client:
You must ensure that the level of information provided takes into account the complexity of the policy and the individual circumstances of the client.
When dealing with a client who is an individual and who is acting for purposes which are outside his trade or profession the information provided under rule 21.1 must include an Insurance Product Information Document.
railway rolling stock, aircraft, ships (sea, lake, river and canal vessels), goods in transit, aircraft liability and liability of ships (sea, lake, river and canal vessels);
credit and suretyship, where the policyholder is engaged professionally in an industrial or commercial activity or in one of the liberal professions, and the risks relate to such activity;
land vehicles (other than railway rolling stock), fire and natural forces, other damage to property, motor vehicle liability, general liability, and miscellaneous financial loss, in so far as the policyholder exceeds the limits of at least two of the following three criteria:
balance sheet total: £6.2 million;
net turnover: £12.8 million;
average number of employees during the financial year: 250.
Part 4: Credit-related regulated financial services activities
Where you undertake credit-related regulated financial services activities for a client, you must ensure that information in connection with such activities and any agreements to which they relate are communicated to the client in a way that is clear, fair and not misleading.
Where you carry on the activity of credit broking, you must indicate in any advertising and documentation intended for consumers or clients the extent and scope of your credit broking activities, in particular whether you work exclusively with one or more lenders or as an independent broker.
provide adequate explanations to the client in order to enable the client to assess whether the proposed regulated credit agreement is suitable to the client's needs and financial situation; and
when providing such explanations, comply with the requirements of Article 5(6) of the Directive 2008/48/EC on credit agreements for consumers.
Before entering into a regulated credit agreement as lender, you must assess the client's creditworthiness on the basis of sufficient information to enable you to make the assessment, where appropriate such information will be obtained from the client and, where necessary, from a credit reference agency.
After entering into a regulated credit agreement where you are the lender, if the parties agree to change the total amount of credit, you must update the financial information you hold concerning the client and assess the client's creditworthiness before any significant increase in the total amount of credit.
In the event of you assigning to a third party your rights as lender in relation to a regulated credit agreement, you must inform the client of the assignment.
Where you are entitled to payments from the same client in respect of two or more regulated credit agreements, you must allow the client to put any payments made, in respect of those agreements, towards the satisfaction of the sum due under any one or more of the agreements in such proportions as the client thinks fit.
Made under section 31 of the Solicitors Act 1974, section 9 of the Administration of Justice Act 1985, section 83 of the Legal Services Act 2007 and section 332 of the Financial Services and Markets Act 2000.
SRA Financial Services (Conduct of Business) Rules
You are reading current version in effect from 25 November 2019
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.
