sajad torkamani

In a nutshell

Usually, firms in the UK need to obtain direct authorisation from the FCA before they’re allowed to carry out financial activities like arranging mortgages or advising on investments. But under certain conditions, a firm can be exempt from these requirements for certain activities.

An activity that usually requires FCA regulation but which doesn’t because of an exemption is referred to as an exempt regulated activity.

Conditions needed for exemption

For a firm to be allowed to carry out an exempt regulated activity (i.e., carry out a regulated activity but without needing FCA authorization), they need to meet a few conditions:

  • Incidental nature: The financial advice given must be incidental and not primary to the firm’s main services. For example, a solicitor helping a client with conveyancing a property can provide advice on business loan options because the the loan options advice is incidental to their main service – conveyancing.
  • Member of a designated professional body: The firm must be a member of a designated professionally body such as the Law Society. This requirement aims to ensure that firms carrying exempt regulated activities are competent and held accountable by other regulatory bodies.
  • Disclosure: The firm must clearly disclose to the client that it isn’t regulated by the FCA for the financial activity but that’s regulated by its professional body (e.g., the Law Society).