Regulated activities—exclusions and exemptions

This Overview is a guide to the Lexis+® UK Financial Services content within the regulated activities—exclusions and exemptions subtopic, with links to the appropriate materials.

The general prohibition

The Financial Services and Markets Act 2000 (FSMA 2000) governs the regulation of financial services and markets in the UK. The general prohibition is central to FSMA 2000. It states that no person may carry on a regulated activity in the UK, or purport to do so, unless they are:

•
an authorised person (ie authorised by the Prudential Regulatory Authority (PRA)/Financial Conduct Authority (FCA) as relevant), or
•
an exempt person

This is known as the general prohibition (FSMA 2000, s 19).

The inclusion of the phrase 'or purport to do so' means that a person will breach the general prohibition even where they do not carry out a regulated activity but they represent that they do or attempt to carry it out.

Businesses, firms and individuals coming fresh to the financial services market or engaging in new activities need to be clear about the restrictions and the consequences of not

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Latest Financial Services News

FCA publishes statement confirming continuation of derivatives trading obligation under UK MiFIR

The Financial Conduct Authority (FCA) has published an explanatory statement under Article 28a(9) of the UK Markets in Financial Instruments Regulation (UK MiFIR) (Regulation (EU) 600/2014 as assimilated in UK law), confirming that its direction modifying the UK derivatives trading obligation (DTO) remains in effect for the six-month period ending 31 December 2025. The direction, issued on 31 December 2024, permits firms subject to the UK DTO, trading with or on behalf of EU clients subject to the EU DTO, to execute those trades on EU trading venues—provided certain conditions are met, including that firms must take reasonable steps to be satisfied the client does not have arrangements in place to execute the trade on a venue to which both the UK and EU have granted equivalence.

Council outlines position on proposed regulation to streamline financial services reporting

The Council of the EU, in its position adopted at first reading on 8 July 2025 on the proposed regulation amending the ESRB Regulation, the EBA Regulation, EIOPA Regulation, the ESMA Regulation, the SRM Regulation, the InvestEU Programme Regulation and the AML Authority Regulation (Regulations (EU) 1092/2010, 1093/2010, 1094/2010, 1095/2010, 806/2014, 2021/523 and 2024/1620), set out its reasons for supporting the proposal. It stated that the position reflects the outcome of negotiations with the European Parliament and supports the objective of ensuring that reporting requirements in the financial services and investment sectors are proportionate, streamlined and effective. The Council also noted that the proposal aims to reduce administrative burdens, avoid duplication and improve the efficiency of supervisory data collection.

PRA finalises policy on identifying groups of connected clients for large exposures

The Prudential Regulation Authority (PRA) has published its final rules outlining how UK banks, building societies and other designated firms should manage large exposures. A key focus is identifying groups of connected clients (GCCs), in which multiple clients pose a single risk to a firm. The policy is based on the European Banking Authority’s (EBA) 2017 Guidelines, which explain how firms should consolidate two or more clients into a single risk due to either control or economic dependency. The PRA has adopted the EBA’s framework with amendments to reflect the UK’s regulatory context. The final policy includes clarifications on the application of control, the treatment of central banks and central governments and the use of an alternative approach for exposures to entities linked to a central government. SS3/25 sets out the PRA’s expectations in relation to the approach firms should take when grouping two or more clients into a ‘group of connected clients’. The amended large exposures rules and accompanying policy material will be effective from 1 January 2026.

Financial Services—other developments (17/7/2025)

A round-up of other developments, which have not been covered in full by the LexisNexis Financial Services practical guidance team but may nevertheless be of interest.

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News