PART II SPECIFIED ACTIVITIES
Chapter XIIAdvising on Investments
The activity
Advising on investments53
F471
Advising a person is a specified kind of activity if the advice is—
a
given to the person in his capacity as an investor or potential investor, or in his capacity as agent for an investor or a potential investor; and
b
advice on the merits of his doing any of the following (whether as principal or agent)—
i
F521A
Paragraph (1) does not apply to a person who is appropriately authorised except to the extent that they are providing a personal recommendation.
1B
A person is appropriately authorised when they are authorised for the purposes of the Act to carry on an activity of a kind specified by a provision of this Order which is not the activity specified by paragraph (1) and is not the activity of agreeing to carry on the activity specified by paragraph (1).
1C
Subject to paragraph (1D), a personal recommendation is a recommendation–
a
made to a person in their capacity as an investor or potential investor, or in their capacity as agent for an investor or a potential investor;
b
which constitutes a recommendation to them to do any of the following (whether as principal or agent)–
i
buy, sell, subscribe for, exchange, redeem, hold or underwrite a particular investment which is a securityF53, structured deposit or a relevant investment; or
ii
exercise or not exercise any right conferred by such an investment to buy, sell, subscribe for, exchange or redeem such an investment; and
c
that is–
i
presented as suitable for the person to whom it is made; or
ii
based on a consideration of the circumstances of that person.
1D
A recommendation is not a personal recommendation if it is issued exclusively to the public.
F452
Advising a person is a specified kind of activity if the advice is—
a
given to the person in that person’s capacity as a lender or potential lender under a relevant article 36H agreement, or in that person’s capacity as an agent for a lender or potential lender under such an agreement; and
b
advice on the merits of that person doing any of the following (whether as principal or agent)—
i
entering into a relevant article 36H agreement as a lender or assuming the rights of a lender under such an agreement by assignment or operation of law,
ii
providing instructions to an operator with a view to entering into a relevant article 36H agreement as a lender or assuming the rights of a lender under such an agreement by assignment or operation of law, where the instructions involve—
aa
accepting particular parameters for the terms of the agreement presented by an operator,
bb
choosing between options governing the parameters of the terms of the agreement presented by an operator, or
cc
specifying the parameters of the terms of the agreement by other means,
iii
enforcing or exercising the lender’s rights under a relevant article 36H agreement, or
iv
assigning rights under a relevant article 36H agreement.
3
Paragraph (2) does not apply in so far as—
a
the advice is given in relation to a relevant article 36H agreement which has been facilitated by the person giving the advice, in the course of carrying on an activity of a kind specified by article 36H and is given by—
i
an authorised person with permission to carry on a regulated activity of the kind specified by article 36H(1) (operating an electronic system in relation to lending),
ii
an appointed representative in relation to that activity,
iii
an exempt person in relation to that activity, or
iv
a person to whom, as a result of Part 20 of the Act, the general prohibition does not apply in relation to that activity;
b
the advice is given in the course of carrying on an activity of a kind specified by article 39F (debt-collecting) by a person carrying on that activity not in contravention of the general prohibition; or
c
the advice is given in the course of carrying on an activity of a kind specified by article 39G (debt administration) by a person carrying on that activity not in contravention of the general prohibition.
4
In this article—
“operator” means a person carrying on an activity of the kind specified by article 36H(1) or (2D), and
“relevant article 36H agreement” means an article 36H agreement (within the meaning of article 36H (operating an electronic system in relation to lending)) which has been, or may be, entered into with the facilitation of a person carrying on an activity of the kind specified by article 36H(1) or (2D).
5
For the purposes of the application of section 22(1) of the Act (regulated activities) to an activity of a kind specified by paragraph (2) of this article, article 88D (credit agreement), and article 73 (investments: general) in so far as it relates to that article, have effect as if the reference to a credit agreement in article 88D includes a reference to a relevant article 36H agreement.
F2Advising on regulated mortgage contracts53A
1
Advising a person is a specified kind of activity if the advice—
a
is given to the person in his capacity as a borrower or potential borrower; and
F431A
A regulated mortgage contract falls within this paragraph if—
a
the contract was entered into on or after 31st October 2004; or
b
the contract—
i
was entered into before 31st October 2004; and
ii
was a regulated credit agreement immediately before 21st March 2016.
2
In this article, “borrower” has the meaning given by article 61(3)(a)(i).
F10Advising on regulated home reversion plans53B
Advising a person is a specified kind of activity if the advice—
a
is given to the person in his capacity as—
i
a reversion seller or potential reversion seller, or
ii
a plan provider or potential plan provider; and
b
is advice on the merits of his doing either of the following—
i
entering into a particular regulated home reversion plan, or
ii
varying the terms of a regulated home reversion plan, entered into on or after 6th April 2007 by him, in such a way as to vary his obligations under that plan.
F10Advising on regulated home purchase plans53C
Advising a person is a specified kind of activity if the advice—
a
is given to the person in his capacity as a home purchaser or potential home purchaser; and
b
is advice on the merits of his doing either of the following—
i
entering into a particular regulated home purchase plan, or
ii
varying the terms of a regulated home purchase plan, entered into on or after 6th April 2007 by him, in such a way as to vary his obligations under that plan.
F18Advising on regulated sale and rent back agreements53D
Advising a person is a specified kind of activity if the advice—
a
is given to the person (“A”) in A’s capacity as—
i
an agreement seller or potential agreement seller, or
ii
an agreement provider or potential agreement provider; and
b
is advice on the merits of A doing either of the following—
i
entering into a particular regulated sale and rent back agreement; or
ii
varying the terms of a regulated sale and rent back agreement entered into on or after 1st July 2009 by A as agreement seller or agreement provider, in such a way so as to vary A’s obligations under that agreement.
F35Advising on regulated credit agreements for the acquisition of land53DA
1
Advising a person (“P”) is a specified kind of activity if—
a
the advice is given to P in P's capacity as a recipient of credit, or potential recipient of credit, under a regulated credit agreement;
b
P intends to use the credit to acquire or retain property rights in land or in an existing or projected building; and
c
the advice consists of the provision of personal recommendations to P in respect of one or more transactions relating to regulated credit agreements F44entered into, or to be entered into, on or after 21st March 2016.
F612
In this article—
a
a reference to any land or building—
i
in relation to an agreement entered into before IP completion day, is a reference to any land or building in the United Kingdom or within the territory of an EEA State;
ii
in relation to an agreement entered into on or after IP completion day, is a reference to any land or building in the United Kingdom;
b
“regulated credit agreement” has the meaning given by article 60B(3).
F30Advising on conversion or transfer of pension benefits53E
1
Advising a person (“P”) is a specified kind of activity if—
a
the advice is given to P in P’s capacity as—
i
a member of a pension scheme; or
ii
a survivor of a member of a pension scheme;
b
P has subsisting rights in respect of any safeguarded benefits; and
c
the advice is advice on the merits of P requiring the trustee or manager of the pension scheme to—
i
convert any of the safeguarded benefits into different benefits that are flexible benefits under the scheme;
ii
make a transfer payment in respect of any of the safeguarded benefits with a view to acquiring a right or entitlement to flexible benefits for P under another pension scheme; or
iii
pay a lump sum that would be an uncrystallised funds pension lump sum in respect of any of the safeguarded benefits.
2
In this article—
“flexible benefit” means—
- a
a money purchase benefit;
- b
a cash balance benefit; or
- c
a benefit, other than a money purchase benefit or cash balance benefit, calculated by reference to an amount available for the provision of benefits to or in respect of the member (whether the amount so available is calculated by reference to payments made by the member or any other person in respect of the member or any other factor);
- a
“pension scheme” has the meaning given by section 1(5) of the Pension Schemes Act 1993 or section 1(5) of the Pension Schemes (Northern Ireland) Act 1993;
“safeguarded benefits” means benefits other than—
- a
money purchase benefits; and
- b
cash balance benefits;
- a
“subsisting right”—
- a
in relation to a member of a pension scheme, means—
- i
any right which has accrued to or in respect of the member to future benefits under the scheme; or
- ii
any entitlement to benefits under the scheme; and
- i
- b
in relation to a survivor of a member of a pension scheme means any right to future benefits, or entitlement to benefits, which the survivor has under the scheme in respect of the member;
- a
“survivor”, in relation to a member of a pension scheme, means a person who has survived the member and has a right to future benefits, or is entitled to benefits, under the scheme in respect of the member;
“trustees or managers” means—
- a
in relation to a scheme established under a trust, the trustees; and
- b
in relation to any other scheme, the managers; and
- a
“uncrystallised funds pension lump sum” has the meaning given by paragraph 4A of Schedule 29 to the Finance Act 2004.
3
Paragraphs (4) to (9) apply for the interpretation of “flexible benefit” and “safeguarded benefits”.
4
“Cash balance benefit”, in relation to a member of a pension scheme or a survivor of a member, means a benefit calculated by reference to an amount available for the provision of benefits to or in respect of the member (“the available amount”) where there is a promise about that amount.
5
But a benefit is not a “cash balance benefit” if, under the scheme—
a
a pension may be provided from the available amount to or in respect of the member; and
b
there is a promise about the rate of that pension.
6
The promise mentioned in paragraph (4) includes, in particular, a promise about the change in the value of, or the return from, payments made by the member or any other person in respect of the member.
7
The promise mentioned in paragraph (5)(b) includes a promise that—
a
the available amount will be sufficient to provide a pension of a particular rate;
b
the rate of a pension will represent a particular proportion of the available amount.
8
A benefit is not excluded from the definition of “cash balance benefit” by paragraph (5) merely because under the scheme there is a promise that—
a
the rate or amount of the benefit payable in respect of a deceased member will be a particular proportion of the rate or amount of the benefit which was (or would have been) payable to the member; or
b
the amount of a lump sum payable to a member, or in respect of a deceased member, will represent a particular proportion of the available amount.
9
“Money purchase benefits”—
a
in relation to a pension scheme governed by the law of England and Wales or Scotland, has the meaning given by section 181 of the Pension Schemes Act 1993; and
b
in relation to a pensions scheme governed by the law of Northern Ireland, has the meaning given by section 176 of the Pension Schemes (Northern Ireland) Act 1993.
Exclusions
Advice given in newspapers etc.54
1
There is excluded from F11articles 53, 53A, 53B F19, 53C F31, 53D F36, 53DA and 53E the giving of advice in writing or other legible form if the advice is contained in a newspaper, journal, magazine, or other periodical publication, or is given by way of a service comprising regularly updated news or information, if the principal purpose of the publication or service, taken as a whole and including any advertisements or other promotional material contained in it, is neither—
a
F4b
that of leading or enabling persons—
i
F46ia
to enter into a relevant article 36H agreement (within the meaning of that article) as a lender, to assume the rights of a lender under such an agreement by assignment or operation of law, or to assign rights under such an agreement,
ii
to enter as borrower into regulated mortgage contracts, or vary the terms of regulated mortgage contracts entered into by them as borrowerF13;
iii
to enter as reversion seller or plan provider into regulated home reversion plans, or vary the terms of regulated home reversion plans entered into by them as reversion seller or plan provider,
iv
to enter as home purchaser into regulated home purchase plans, or vary the terms of regulated home purchase plans entered into by them as home purchaserF24;
v
to enter as agreement seller or agreement provider into regulated sale and rent back agreements, or vary the terms of regulated sale and rent back agreements entered into by them as agreement seller or agreement provider;
F37va
F33vi
to require the trustee or manager of a pension scheme to take any of the actions referred to in article 53E(1)(c).
2
There is also excluded from F14articles 53, 53A, 53B F21, 53C F34, 53D F36, 53DA and 53E the giving of advice in any service consisting of the broadcast or transmission of television or radio programmes, if the principal purpose of the service, taken as a whole and including any advertisements or other promotional material contained in it, is neither of those mentioned in paragraph (1)(a) and (b).
F542A
Paragraphs (1) and (2) do not apply to advice which is a personal recommendation falling within article 53(1A).
3
F25The FCA may, on the application of the proprietor of any such publication or service as is mentioned in paragraph (1) or (2), certify that it is of the nature described in that paragraph, and may revoke any such certificate if it considers that it is no longer justified.
4
A certificate given under paragraph (3) and not revoked is conclusive evidence of the matters certified.
F3Advice given in the course of administration by authorised person54A
F151
A person who is not an authorised person (“A”) does not carry on an activity of the kind specified by article 53A by reason of—
a
anything done by an authorised person (“B”) in relation to a regulated mortgage contract which B is administering pursuant to arrangements of the kind mentioned in article 62(a); or
b
anything A does in connection with the administration of a regulated mortgage contract in circumstances falling within article 62(b).
F172
A person who is not an authorised person (“A”) does not carry on an activity of the kind specified by article 53B by reason of—
a
anything done by an authorised person (“B”) in relation to a regulated home reversion plan which B is administering pursuant to arrangements of the kind mentioned in article 63C(a); or
b
anything A does in connection with the administration of a regulated home reversion plan in circumstances falling within article 63C(b).
3
A person who is not an authorised person (“A”) does not carry on an activity of the kind specified by article 53C by reason of—
a
anything done by an authorised person (“B”) in relation to a regulated home purchase plan which B is administering pursuant to arrangements of the kind mentioned in article 63G(a); or
b
anything A does in connection with the administration of a regulated home purchase plan in circumstances falling within article 63G(b).
F224
A person who is not an authorised person (“A”) does not carry on an activity of the kind specified by article 53D by reason of
a
anything done by an authorised person (“B”) in relation to a regulated sale and rent back agreement which B is administering pursuant to arrangements of the kind mentioned in article 63K(a); or
b
anything A does in connection with the administration of a regulated sale and rent back agreement in circumstances falling within article 63K(b).
F385
A person who is not an authorised person (“A”) does not carry on an activity of the kind specified by article 53DA by reason of—
a
anything done by an authorised person (“B”) in relation to a regulated credit agreement which B is administering pursuant to arrangements of the kind mentioned in article 60I(a) (arranging administration by authorised person); or
b
anything A does in connection with the administration of a regulated credit agreement in circumstances falling within article 60I(b).
Advice given by reason of providing pensions guidance F62...54B
1
A person does not carry on an activity of the kind specified in article 53, 53A, 53B, 53C or 53D by reason of providing pensions guidance F63....
F642
For the purposes of paragraph (1), pensions guidance means—
a
information or guidance provided by the Money and Pensions Service in carrying out its pensions guidance function (see section 3 of the Financial Guidance and Claims Act 2018);
b
information or guidance provided by another person with whom arrangements under section 5(1), (2) or (3) of the Financial Guidance and Claims Act 2018 are made to carry out the Money and Pensions Service’s pensions guidance function.
Other exclusions55
F51
Article 53 is also subject to the exclusions in articles 66 (trustees etc.), 67, (profession or non-investment business), 68 (sale of goods and supply of services), 69 (groups and joint enterprises), 70 (sale of body corporate) F1, 72 (overseas persons)F9F58... 72B (activities carried on by a provider of relevant goods or services) F27, 72AA (managers of F57UK UCITS and AIFs) F29, 72D (large risks contracts where risk situated F60outside the United Kingdom), 72G (local authorities) and 72H (insolvency practitioners).