Find out which permissions to apply for in order to become authorised.
Adviser/arranger of wholesale funds
An adviser/arranger may typically advise fund managers or other professional investors on the merits of investing in a particular fund, and then arrange for those investments to take place. They tend to offer advice to professional customers only.
They can carry out deals on behalf of their customers (which means they require the ‘arranging deals in investments’ permission), but the decision to invest must be made by the customer.
An adviser/arranger/marketer will provide information to investors on potential investment schemes, but may not offer advice on their merits.
Typical permissions required
- advising on and arranging deals in investments
- agreeing to carry on regulated activities
- making arrangements with a view to transactions in investments
If you are intending to act purely as a marketer, you will not require permission to advise on investments. You will need only permissions to ‘make arrangements’ and ‘agree to carry out a regulated activity’.
Firms may also require the permission:
- dealing in investments as agent
Financial resource requirement
The CRD (Capital Requirements Directive) has been in place since 1 January 2007, and whether a firm that comes under MiFID falls within its scope depends on its regulated activities and the business it is conducting.
Advisers/arrangers will usually end up as either an exempt CAD firm, or not subject to the CRD by meeting the requirements to be an Article 3 MiFID exempt firm. Firms could also be a BIPRU €50,000 firm, although this is less likely (the €50,000 refers to the firm’s Base Capital Requirement; under CRD, firms are also subject to a Variable Capital Requirement).
If a firm meets the requirements of the Article 3 MiFID exemption and does not wish to opt back into MiFID, its financial resource requirement will be detailed in IPRU(INV) Chapter 5. For exempt CAD firms, the requirement will be to hold capital of at least €50,000.
Advisers/arrangers can passport their services to other countries in the EEA. This applies to both BIPRU and exempt CAD firms.
See definition of a BIPRU firm
Check the scope of MiFID and CRD-IV 9
For MiFID exemptions, see PERG 13.5
06/08/2020: Link changed fixed broken link to Connect