Early stages

Before applying for authorisation, you need to decide what type of firm you are setting up and what regulated activities you will need to apply for permissions to carry out.

Firm type

To decide your firm type, look at both the commercial and regulatory aspects of your business. You should first understand the business activities that you would carry out as an organisation. Once you have decided your business offerings, you need to consider regulatory aspects of your business to determine your regulatory status.

See our sector views for the sectors and firms we regulate.

Threshold conditions

Our threshold conditions represent the minimum conditions for which we are responsible, which a firm is required to satisfy, and continue to satisfy, to be given and to retain Part 4A permission.

Regulated activities

We are bound by the Financial Services and Markets Act 2000 (FSMA) to regulate certain financial activities. See when authorisation is required.

You can find a list and description of all regulated activities in our Handbook PERG 2.7: Activities: a broad outline and on our authorisations pages. We also recommend that you consider the PERG 2 Annex 1 decision tree to check whether you need to apply for authorisation.

We strongly encourage you to refer to the details in the Handbook and, if required, seek legal advice to determine whether you need to apply for authorisation. This can be looked upon as a series of tests:

While most regulated activities will need to be performed for specified investments there are exceptions.

These regulated activities may be carried on for property of any kind:

​Asset managers performing any of these 5 regulated activities will not be exempt even if the investments they manage or hold are not specified investments. This is because the term ‘property of any kind’ makes tests 3 and 4 much broader for such activities.

Specific regulated activities for asset managers

We generally expect asset managers to have permission to carry on one or more of these regulated activities:

  • managing investments
  • managing an AIF
    • managing an authorised AIF
    • managing an unauthorised AIF
  • managing a UCITS
  • establishing, operating or winding up a CIS

In addition, depending on your involvement with your investment mandates, your other business and so on, you may also hold the following regulated activities:

  • dealing in investments as principal
  • dealing in investments as agent
  • arranging deal in investments
  • making arrangements with a view to transactions in investments
  • safeguarding and administering investments
    • arranging safeguarding and administering investments
  • advising on investments

Not all types of asset managers can hold all of the above activities because certain EU Directives restrict what regulated business an asset manager can perform.

Permissions

Consider what regulated activities you will perform. We usually refer to a firm’s scope of regulated activity as ‘scope of permission’. This consists of following key components and you need to decide and apply for all of these (as applicable) when you submit your application.

Regulated activities

 

Activities covered under Part II of the Regulated Activities Order. See PERG 2 Annex 2.

Regulated activities broadly maps your commercial activities to regulated ones.

Specified investments

 

Those investments specified in Part III of the Regulated Activities Order. Refer to PERG 2 Annex 2. 

Specified investments broadly maps any investments you might deal with to regulated ones.

Customers

 

Those person to whom a firm provides, intends to provide or has provided a service in the course of carrying on a regulated activity.

Different customer types have different regulatory protections. Your obligations could be different for different customer types

Limitations

A limitation can be added to a regulated activity to limit the scope that regulated activity.

The purpose of a limitation is to specify that narrower scope, that could result in lower risk, lower capital, fewer rules etc.

Requirements

A requirement applies to entire scope of permission  to suggest that the authorised firm can act or should refrain from acting in a certain way.

The benefits of a requirement are similar to a limitation.

Waivers

Waivers and modifications are variations to Handbook rules. A ‘waiver’ means you do not have to comply with a rule. A ‘modification’ allows you to comply with a rule amended to fit your circumstances.

We publish the scope of permission for firms on our Financial Services Register You can search for the scope of permission for any firm using legal name or postcode address of the firm.   

Exclusions and exemptions

See exclusions applicable to certain regulated activities under:

These exclusions could mean that you are either:

  • not considered as performing some of the regulated activities. or
  • don’t separately need those regulated activities in your scope of permission

In particular, see PERG 2.9.22. This significantly broadens the scope of activities that can be carried out under the two regulated activities of managing a UCITS and managing an AIF.

Further, certain firms, despite performing regulated activities, may not need any authorisation at all under PERG 2.10 Persons carrying on regulated activities who do not need authorisation.

If you believe that you do not perform any regulated activity

The above guidance is very high level and does not necessarily cover all possible scenarios. If you have any doubts, we expect you to seek legal advice on your assessment. Additionally, our rules can change in the future and we expect you to be aware of any such changes that might change your perimeter status.

Carrying out regulated activities without authorisation

Section 19 of the Financial Services and Markets Act prohibits performance of regulated activities in the UK.

See section 21 prohibition - restriction on financial promotions of FSMA to see what other prohibitions may apply.

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