Carrying on unauthorised business and breaching the general prohibition
Produced in partnership with Sarah Clarke of 3 Serjeants’ Inn
Carrying on unauthorised business and breaching the general prohibition

The following Financial Services guidance note Produced in partnership with Sarah Clarke of 3 Serjeants’ Inn provides comprehensive and up to date legal information covering:

  • Carrying on unauthorised business and breaching the general prohibition
  • The general prohibition under FSMA 2000
  • The Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA)
  • An outline of the law
  • Some types of regulated activity

This Practice Note outlines the relevant legislative provisions stipulating the requirement to be authorised to provide financial services in the UK. The regulators may take action against persons and businesses which operate without the correct authorisations. This Practice Note introduces the general prohibition in section 19 of the Financial Services and Markets Act 2000 (FSMA 2000), various exemptions and the related criminal offences under FSMA 2000, ss 23–25.

The general prohibition under FSMA 2000

In line with section 19 of the Financial Services and Markets Act 2000 (FSMA 2000), a person cannot carry out a regulated activity in the UK, or purport to do so, unless they are either:

  1. authorised (by the Prudential Regulation Authority (PRA) or Financial Conduct Authority (FCA)), or

  2. exempt

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 represent that they do or attempt to carry it out.

The regulatory system requires firms to consider whether authorisation is needed by the PRA or the FCA and includes the concept of PRA-regulated activity. As the UK operates a dual regulatory system via the PRA or FCA, there is in theory greater scope for firms to unwittingly contravene requirements to be authorised and not have the correct Part