Unauthorised business—legal and regulatory framework

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

  • Unauthorised business—legal and regulatory framework
  • The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA)
  • Dealing with a breach of the general prohibition
  • Consumer protection
  • Additional information on regulated activity

Unauthorised business—legal and regulatory framework

There is a fundamental prohibition at the heart of the UK regulatory regime whereby a person cannot carry out a regulated activity in the UK, or purport to do so, unless they are either:

  1. authorised (by the appropriate regulator), or

  2. exempt

This is known as the general prohibition and it is found in the Financial Services and Markets Act 2000 (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 represent that they do or attempt to carry it out.

More information on the general prohibition, exemptions and the regulators can be found in: The general prohibition—overview, The general prohibition and implications of its breach, Financial Conduct Authority—objectives and principles, UK regulators—financial services—overview, What are regulated activities?, Regulated activities—specified activities and investments—overview, FCA and PRA authorisation under Part 4A of FSMA 2000.

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 obeying financial services-related rules and requirements, such as FSMA 2000, s 19. Under FSMA 2000, s 23 it is a criminal offence to contravene the general prohibition, which may lead to an unlimited fine and/or imprisonment for up to two

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