Q&As

Would privately (ie not via a public platform) facilitating an opportunity to individuals to lend to a corporate be caught under the Financial Services and Markets Act 2000 (FSMA 2000) as a regulated activity requiring authorisation? Is it the case that since the borrower is a corporate entity, the credit broking restrictions will not be relevant since there is no consumer contract? It also does not seem like a private arrangement like this would fall under operating an electronic system in relation to lending. What are your thoughts as to whether it may be a regulated activity, whether under the above or other provisions of FSMA 2000?

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Produced in partnership with Thomas Samuels of Gough Square Chambers
Published on LexisPSL on 21/09/2020

The following Banking & Finance Q&A produced in partnership with Thomas Samuels of Gough Square Chambers provides comprehensive and up to date legal information covering:

  • Would privately (ie not via a public platform) facilitating an opportunity to individuals to lend to a corporate be caught under the Financial Services and Markets Act 2000 (FSMA 2000) as a regulated activity requiring authorisation? Is it the case that since the borrower is a corporate entity, the credit broking restrictions will not be relevant since there is no consumer contract? It also does not seem like a private arrangement like this would fall under operating an electronic system in relation to lending. What are your thoughts as to whether it may be a regulated activity, whether under the above or other provisions of FSMA 2000?

Would privately (ie not via a public platform) facilitating an opportunity to individuals to lend to a corporate be caught under the Financial Services and Markets Act 2000 (FSMA 2000) as a regulated activity requiring authorisation? Is it the case that since the borrower is a corporate entity, the credit broking restrictions will not be relevant since there is no consumer contract? It also does not seem like a private arrangement like this would fall under operating an electronic system in relation to lending. What are your thoughts as to whether it may be a regulated activity, whether under the above or other provisions of FSMA 2000?

This Q&A assumes that the description of the proposed platform is accurately and fully described in the question.

Authorisation is required under the Financial Services and Markets Act 2000 (FSMA 2000) for any specified activity carried on by way of business. Activities are specified insofar as they are defined by the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (RAO 2001), SI 2001/544 and not otherwise ‘excluded’. In the scenario set out in the question, there are two activities which are primarily likely to be relevant: ‘credit broking’ (RAO 2001, SI 2001/544, art 36A) and ‘operating an electronic system in relation to lending’ (RAO 2001, SI 2001/544, art 36H).

Credit broking is defined by reference to six different acts,

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