Mortgages in breach of the Financial Services and Markets Act 2000
Mortgages in breach of the Financial Services and Markets Act 2000

The following Property practice note provides comprehensive and up to date legal information covering:

  • Mortgages in breach of the Financial Services and Markets Act 2000
  • The general prohibition
  • Breach of general prohibition
  • Regulated activity
  • Part 4A Permission
  • Specified activities—regulated mortgage contracts
  • Carried on by way of business
  • Unenforceable agreements

The general prohibition

Residential mortgages provided in the course of a business potentially fall within the Financial Services and Markets Act 2000 (FSMA 2000) general prohibition. Only an authorised person or exempt person (as a result of an exemption order or as an authorised representative) may carry on a 'regulated activity', under FSMA 2000, in the UK. Anyone who contravenes this general prohibition is liable:

  1. on summary conviction, to imprisonment for a term not exceeding six months or a fine not exceeding the statutory maximum of £5,000, or both

  2. on conviction on indictment, to imprisonment for a term not exceeding two years or a fine, or both

If an authorised person carries on a regulated activity, or purports to do so without permission he is take to have contravened a requirement imposed on him by the Financial Conduct Authority (FCA ) under the FSMA 2000. Such a person is only guilty of an offence if he carries on a credit-related regulated activity designated by the Treasury by Order, or purports to do so.

Persons who qualify as authorised persons are listed under FSMA 2000, s 31.

Breach of general prohibition

If an unauthorised person enters into an agreement, or an agreement is made through an unauthorised person, in breach of the general prohibition the agreement is unenforceable against the other party who is entitled to recover:

  1. any money or

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