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AUTH App 1.31 Exclusions for advising on investments

AUTH App 1.31.1G

The Regulated Activities Order contains a number of exclusions which prevent certain activities from being a regulated activity.

AUTH App 1.31.2G

As respects article 53, the main exclusion relates to advice given in periodical publications, regularly updated news and information services and broadcasts (article 54: Advice given in newspapers etc). The exclusion applies if the principal purpose of any of these is not to give advice covered in article 53 or to lead or enable persons to acquire or dispose of securities or contractually based investments. This is explained in greater detail, together with the provisions on the granting of certificates, in AUTH 7.

AUTH App 1.31.3G

It is also possible for advice to be excluded if it is given by a person in the course of carrying on a profession or business (other than a regulated activity). This is if it is reasonably to be regarded as necessary for him to give the advice to provide his professional or other services and he is not separately paid for giving the advice (article 67: Activities carried on in the course of a profession or non-investment business). This could arise in the context of advice given by persons such as :

  1. (1)

    a solicitor, accountant or tax adviser; or

  2. (2)

    a debt counsellor; or

  3. (3)

    an employment agency.

AUTH App 1.31.4G

For example, it may be necessary for a person referred to in AUTH App 1.31.3 G (1) or AUTH App 1.31.3 G (2) to advise a client to sell all his assets for tax, legal or debt reduction reasons. However, it may not be necessary for him to recommend selling some investments and not others. Whether or not this is the case will depend on the circumstances in which the advice is given.

AUTH App 1.31.5G

1Certain of the exclusions in the Regulated Activities Order that apply to the regulated activity of advising on investments are not available where the advice either relates to a contract of insurance or amounts to insurance mediation or reinsurance mediation. This results from the requirements of the Insurance Mediation Directive and is explained in more detail in AUTH App 5 (Insurance mediation activities).