Q&As

What (if any) significance do the words ‘by way of business’ in section 22 of the Financial Services and Markets Act 2000 actually carry when it comes to the need to get Financial Conduct Authority authorisation for credit broking? Notwithstanding the use of the above words, if credit broking is ancillary to one’s main (non-financial) business, is a credit broking authorisation still required?

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Published on LexisPSL on 24/02/2021

The following Financial Services Q&A provides comprehensive and up to date legal information covering:

  • What (if any) significance do the words ‘by way of business’ in section 22 of the Financial Services and Markets Act 2000 actually carry when it comes to the need to get Financial Conduct Authority authorisation for credit broking? Notwithstanding the use of the above words, if credit broking is ancillary to one’s main (non-financial) business, is a credit broking authorisation still required?

What (if any) significance do the words ‘by way of business’ in section 22 of the Financial Services and Markets Act 2000 actually carry when it comes to the need to get Financial Conduct Authority authorisation for credit broking? Notwithstanding the use of the above words, if credit broking is ancillary to one’s main (non-financial) business, is a credit broking authorisation still required?

The ‘by way of business’ test in section 22 of the Financial Services and Markets Act 2000 (FSMA 2000) applies in the same way in relation to credit broking as it does for any other activity defined as being of a specified kind under the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, SI 2001/544. Its function is to distinguish between those activities of a specified kind which are ‘regulated’ (such that a firm must be either authorised or exempt to avoid breaching the ‘general prohibition’ in FSMA 2000, s 19), and those which are not.

Guidance on the meaning of the phrase is found in the Perimeter Guidance (PERG) module of the FCA Handbook. PERG 2.3.3G notes that it is ‘ultimately a question of judgment that takes account of several factors (none of which is likely to be conclusive)…’. Further, Q38 of PERG 14.5 identifies a few key factors to be considered:

  1. the degree of continuity

  2. the existence of a commercial

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