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Status: You are viewing the version of the handbook as on 2005-06-30.

AUTH App 1.33 Introducing

AUTH App 1.33.1G

As with advice, there are various exclusions in the Regulated Activities Order which take certain arrangements out of the scope of article 25. Two of these are likely to be particularly relevant to persons who are mainly concerned with making or helping others to make communications.

AUTH App 1.33.2G

Article 29 of the Regulated Activities Order states that certain arrangements are not covered by article 25. These are arrangements made by an unauthorised person ('A'). The arrangements must be made for or with a view to a transaction which is or is to be entered into by another person (the client) with or through an authorised person. It must also be the case that:

  1. (1)

    the transaction is or will be entered into on advice given to the client by an authorised person; or

  2. (2)

    it is clear, in all the circumstances, that the client, in his capacity as an investor, is not seeking and has not sought advice from A on the merits of his entering into the transaction (or, if the client has sought such advice, A has declined to give it but has recommended that the client seek such advice from an authorised person).

For article 29 to apply, it is also necessary that, in return for making the arrangements, A does not receive from any person other than the client financial reward or other advantage, for which he does not account to the client, arising out of his making the arrangements (AUTH App 1.12.11 G gives guidance on when a person will be regarded as having received reward from someone other than his client).

AUTH App 1.33.3G

This exclusion may apply, for example, where a website operator, without offering any advice, sets up links to the sites of investment firms but does not receive any form of payment from any of the firms for doing so.

AUTH App 1.33.4G

Of potentially greater significance is the exclusion in article 33 of the Regulated Activities Order which excludes arrangements where :

  1. (1)

    they are arrangements under which persons will be introduced to another person;

  2. (2)

    the person to whom introductions are to be made is:

    1. (a)

      an authorised person; or

    2. (b)

      an exempt person acting in the course of business comprising a regulated activity in relation to which he is exempt; or

    3. (c)

      a person who is not unlawfully carrying on regulated activities in the United Kingdom and whose ordinary business involves him in engaging in certain activities; and

  3. (3)

    the introduction is made with a view to the provision of independent advice or the independent exercise of discretion in relation to investments generally or in relation to any class of investments to which the arrangements relate.

AUTH App 1.33.5G

In the FSA's view, article 33 will apply, for example, where persons are finding potential customers for independent financialadvisers, advisory stockbrokers or independent investment managers. In this case, the introducer is allowed to receive a payment for making introductions. However, it will not apply where the introductions are made either to a person whose advice or management services would not be independent (for example, a productprovider such as a life office or a manager of unit trust schemes) or for the purposes of execution-only dealing.

AUTH App 1.33.6G

1The exclusions in Articles 29 and 33 of the Regulated Activities Order are not available where the investment is a contract of insurance. However, certain other exclusions do apply. This results from implementation of the requirements of the Insurance Mediation Directive and is explained in more detail in AUTH App 5.6 (Insurance mediation activities. The regulated activities: arranging deals in, and making arrangements with a view to transactions in, contracts of insurance).