The general prohibition and implications of its breach

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

  • The general prohibition and implications of its breach
  • The general prohibition
  • Authorised persons acting outside Part 4A permission
  • Contravention of the general prohibition and FSMA 2000, ss 20(1) and 20(1A)
  • False claims to be authorised or exempt
  • Enforceability of agreements
  • Agreements made by unauthorised persons
  • Agreements relating to credit
  • Agreements made through unauthorised persons
  • Accepting deposits in breach of general prohibition

The general prohibition and implications of its breach

The general prohibition

Under section 19 of the Financial Services and Markets Act 2000 (FSMA 2000), a person cannot carry out regulated activities in the UK, or purport to do so, unless that person is authorised or exempt. This is known as the general prohibition. For information about the territorial scope of the general prohibition, see Practice Note: Territorial scope of the prohibition.

An authorised person is a person who has been given permission by the Financial Conduct Authority (FCA) or the Prudential Regulation Authority (PRA) under FSMA 2000, Pt 4A to carry on certain regulated activities. As a result of the UK’s decision to leave the EU, the EEA Passport Rights (Amendment, etc, and Transitional Provisions) (EU Exit) Regulations 2018, SI 2018/1149, reg 2 has revoked FSMA 2000, s 31(1)(b) and (c), which included firms passporting their services into the UK under a EEA directive within the definition of ‘authorised person’. For more information, see Practice Note: Impact of Brexit: regulated activities and financial promotions—quick guide.

An exempt person is (in relation to the carrying on of a regulated activity) a person who is exempt from the general prohibition in respect of that activity as a result of being a person who:

  1. falls within the Financial Services and Markets Act 2000 (Exemption) Order 2001, SI 2001/1201

  2. is an appointed representative as

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