Unauthorised business and the approach to enforcement—criminal proceedings
Produced in partnership with Sarah Clarke of 3 Serjeants’ Inn
Unauthorised business and the approach to enforcement—criminal proceedings

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:

  • Unauthorised business and the approach to enforcement—criminal proceedings
  • The general prohibition under FSMA 2000
  • The Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA)
  • Breach of the general prohibition
  • Breach of the restriction on financial promotion (FSMA 2000, ss 21 and 25)
  • Misleading statements and practices
  • Other (non FSMA 2000) criminal offences
  • Co-operation with other prosecuting authorities

The general prohibition under FSMA 2000

The general prohibition is a concept at the heart of the UK regulatory system. This means that persons providing financial services must have the necessary authorisations and permissions in place in order to carry on their business legitimately.

The UK’s financial services regulatory system requires firms to consider whether authorisation is needed by a number of bodies and includes the concept of PRA-regulated activity. There is in theory greater scope for firms to unwittingly contravene requirements to be authorised and not have the correct Part 4A permissions in place. However, the reality is that much of the enforcement covers firms and persons who probably never had an intention to be authorised, eg boiler rooms, share scams, deposit frauds, and ponzi schemes (all frauds of various guises). For more information, see What are regulated activities?, Regulated activities—specified activities and investments—overview, PRA-regulated activities and the scope of PRA regulation, Boiler room fraud, Financial Conduct Authority—preparing for authorisation, Prudential Regulation Authority—preparing for authorisation and Financial Conduct Authority—objectives and principles.

The Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA)

Through its strategic objective (ensuring that the relevant markets function well) and the operational objective of consumer protection (see FSMA 2000, ss 1B and 1C) preventative and punitive activity in relation to unauthorised business is more relevant