Financial Services

Question 1

What is the Designated Prof Bodies Exemption under the FSMA?

Answer 1

Incidental activities of members of designated profession bodies. Can provide financial service (including managing) incidentally, as necessary part of legal advice IF regulated by SRA .

Incidental activity must be incidental to firm’s work as a whole AND incidental to client’s matter. NB can include insurance policy advice

Question 2

General prohibition

Answer 2

Under the general prohibition of FSMA, a firm of solicitors may not carry on regulated activity in the UK unless they are authorised or exempt from authorisation.

Question 3

What is the Acting as Trustee, Nominee or Personal Rep exclusion

Answer 3

Solicitor can advise, arrange, manage and safeguard investments when acting as a Trustee, Nominee or Personal Rep

Question 4

What is the incidental activities exclusion

Answer 4

Sol can advise, deal as agent, arrange, and safeguard (NOT MANAGE) if incidental to provision of legal advice and provision of the advice is necessary part of services. BUT not if billed separately to advice, AND not if related to insurance policies.

Question 5

What is the introducing/agent exclusion? What are the two relevant circs when this is not available?

Answer 5

Solicitor can introduce client to person authorised by FCA + may arrange or act as agent re specified investment if client receives advice from FCA authorised. BUT not available re insurance contracts AND NOT if Sol receives commission.

Question 6

What is the takeover exclusion? Which three specified activities does it allow a solicitor to exercise?

Answer 6

Solicitor can deal as agent, arrange or advise with respect to a client who is buying or selling 50% or more of voting shares, or otherwise taking control of daily running of the company

Question 7

What is the regulated activity of managing?

Answer 7

Exercising discretion in deciding which shares (or other specified investment) the client should sell (or buy)

Question 8

What are the specified activities?

Answer 8

‘ADAMS - Activities = Advising, Dealing as an agent, Arranging, Managing, and Safeguarding.

Question 9

What are the specificied investments? Which relevant investments are excluded?

Answer 9

F.M.DIPS
The specified investments most relevant to a solicitor =
Funeral plans, Mortgage contracts, Debentures, Insurance contracts, Pension schemes, and Shares in a company;

Relevant exclusions: The firm would be able to advise a client on the purchase of Premium Bonds and Land.