Firms and individuals must be authorised by the Financial Conduct Authority (FCA) to carry out regulated financial service activities and / or offer credit to consumers. However, authorization is not needed for Introducers or Overseas Persons, which are shown as examples for exclusions from the need to obtain authorization for the activity.
It is our view that you should not take advantage of these exclusions because if you fully comply and obtain authorization you will increase your value in the eyes of those that you deal with. It is a real plus to be regulated by the FCA and the cost of compliance is not too high.
Please take the time to read through the material below that has been taken from the government website, with some simple comments from us added. It includes some sample pricing. The appropriate structure for applications for these services should include a Private Limited Company as shown under our HOME label above as the applicant.
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“The Financial Services and Markets Act (FSMA) says any firm or individual who carries out a regulated activity in the UK must be authorised or registered by them, unless they are exempt.
Firms and individuals must be authorised by the Financial Conduct Authority (FCA) to carry out regulated financial service activities and offer credit to consumers.
Regulated financial activities
Regulated activities relate to investments specified by the Treasury or to property, and include:
dealing with investments (buying, selling etc) or offering or agreeing to do so, and in the case of insurance contracts, carrying out the contract
arranging investment deals
asset administration and safekeeping
investment management and advising on investments
creating, running or winding up collective investment schemes
computer or web-based investment transactions
dealing in securities – eg stocks and shares (or certificates representing them), or options and futures
dealing with debentures, bonds, loan stock etc, including government bonds
collective investment scheme units
dealing with insurance contracts
loans secured on land and other arrangements involving land
The following activities are taken to be part of the above list and are included in the list of services requiring either AUTHORIZATION or coverage by REGISTRATION:
carrying out or helping to administer insurance contracts (as a firm’s principal)
investments: dealing in or managing (as a principal or agent), arranging deals, safeguarding and administering, advising
home finance: arranging, advising on, entering into and administering
operating a multilateral trading facility
sending dematerialised instructions (electronic transfer of title in investments like securities and contractually-based investments)
setting up collective investment schemes
setting up stakeholder pensions schemes
providing basic advice on stakeholder products
Lloyd’s market activities
entering funeral plan contracts
agreeing to do most of the above activities
The application fee you will have to pay depends on whether your application is:
moderately complex (£5,000)
Most financial advisers, mortgage brokers and general insurance intermediaries will be straightforward applications. “
There is then a very complicated annual fee schedule, which varies immensely depending upon the classification and volume. We suggest that you allow £1,000 for a basic type of activity with low volume.
Once authorization or registration is achieved you have a Financial Structure in the UK that is superior to those available in other countries and very widely accepted by Banks and investers around the world.
Registration will cost you less than authorization. In addition, the compliance requirements are lighter.
“Some firms may only need to be registered rather than authorised. This usually means they are run in a lower-risk environment, so we do not need as much detail about their business or protect the funds they receive from customers for payment services.
Registered firms or societies include:
some payment services providers
some friendly and registered societies (co-operative societies, community benefit societies, and societies previously referred to as industrial and provident societies)
consumer buy-to-let firms
working men’s clubs
Some types of company and individuals might not need to be authorised. These are:
appointed representatives (agents for the authorised principal firm)
professional firms – like solicitors, accountants or actuaries – that run regulated activities alongside their main business
local authorities or some housing groups that run insurance mediation or mortgage activities.
Exclusions are conditions that turn normally regulated activities into unregulated ones. So if you rely on an exclusion, you won’t need authorisation to do it.
Examples of exclusion include:
overseas persons exclusion”
While these 2 items in green will be viewed very favourably by persons overseas, I would like to caution that in practise UK service providers in these regulated fields will most often not pay introducers and overseas persons fees of any description unless you are at least registered and compliant. The reason for this is that unless you are registered and complying with all the due diligense requirements for the prevention of money laundering and other legislated requirements the supplier has additional risk themselves that they do not want to ‘overlook’.
Firms and individuals must be authorised by the Financial Conduct Authority (FCA) to carry out regulated financial service activities and offer credit to consumers. However, authorization is not needed for Introducers or Overseas Persons, which are shown as examples for exclusions from the need to obtain authorization for the activity.
It is our view that you should not take advantage of these exclusions because if you fully comply and obtain authorization you will increase your value in the eyes of those that you deal with. It is a real plus to be regulated by the FCA.