PERG 2 Annex 2 Regulated activities and the permission regime

1 Table

1.1 G

Table 1 is designed to relate the permission regime as operated by the FCA20 to regulated activities. It does not explain how the permission regime as operated by the PRA relates to regulated activities. It therefore does not cover PRA-regulated activities which only apply to PRA-authorised persons. Those PRA-regulated activities are set out in Table 1A.20 Section 55E(4)20of the Act gives the FCA20 the power to describe the regulated activity or regulated activities for which it gives permission in such manner as the FCA20 considers appropriate. Table 1 details how the FCA20 has chosen to describe the regulated activities and specified investments for the purposes of the permission regime.

20 20 20 20

1.2 G

In an application for Part 4A permission20, an applicant will need to state the regulated activities it requires permission to carry on. This will involve an applicant identifying the regulated activities and the specified investments associated with those activities for which it requires Part 4A permission.20

20 20

1.3 G

Part II of the Regulated Activities Order (Specified activities) specifies the activities for the purposes of section 22 of the Act. This section states that an activity is a regulated activity if it is an activity of a specified kind which is carried on by way of business and:

(1)

relates to an investment of a specified kind; or

(2)

in the case of an activity specified for the purposes of section 22(1)(b) of the Act, is carried on in relation to property of any kind.13

13(3)

relates to information about a person's financial standing.

Part III of the Regulated Activities Order (Specified investments) specifies the investments referred to in (1).

1.4 G

Column 1 of Table 1 lists the regulated activities and column 2 lists the associated specified investments. Descriptions of some categories of specified investments are expanded in Tables 2 and 3. There are notes to all three tables which provide further explanation where appropriate.

1.5 G

A reference to an article in the tables in PERG 2 Annex 2 G is to the relevant article in the Regulated Activities Order.

2 Table

Table 1: Regulated Activities (excluding PRA-only activities) 20 [See note 1 to Table 1]

Regulated activity

Specified investment in relation to which the regulated activity (in the corresponding section of column one) may be carried on

(a) [deleted]20

20
20

Issuing electronic money

(aa) issuing electronic money (article 9B)

electronic money (article 74A)

8 Activities of a dormant account fund operator

8(ab) the meeting of repayment claims and managing dormant account funds (including the investment of such funds) (article 63N)

See Note 8 to Table 111

11 Bidding in emissions auctions

11(ac) bidding in emissions auctions

emissions auction products

20

(b) [deleted]20

(c) [deleted]20

20 20
20

Designated investment business [see notes 1A, 1B and 1C to Table 1] 11

11

(d) dealing in investments as principal (article 14) [see note 2 to Table 1]

(e) dealing in investments as agent (article 21) [see notes 1B and 2 to Table 1]

(f) arranging (bringing about) deals in investments (article 25(1)) [see note 1B to Table 1] [also see Sections of Table 1 headed 'The Lloyd's market' and 'Regulated mortgage activity']

(g) making arrangements with a view to transactions in investments (article 25(2)) [ see note 1B to Table 1] [also see Sections of Table 1 headed 'The Lloyd's market

' and 'Regulated mortgage activity']

(in relation to (d) to (g) and (h) to6 (l)) security [expanded in Table 3]; or

contractually based investment [expanded in Table 3].6

(in relation to (e) to (g) and (j) only) a long-term care insurance contract which is a pure protection contract.

6

6(ga) operating a multilateral trading facility (article 25D) [see note 2A]

6 securities or contractually based investments which are financial instruments (see PERG 13 Annex 2 G Table 2 and note 2A to Table 1]).

6(h) managing investments (article 37) [see note 3 to Table 1]

(i) safeguarding and administering investments (article 40) [see note 3 Table 1]

For the purposes of the permission regime, this regulated activity is subdivided into:

(j) advising on investments (except P2P agreements)18 (article 53(1)18 [see note 1B to Table 1] [also see Section of Table 1 headed 'Regulated mortgage activity']

For the purposes of the permission regime, this regulated activity:

16(ja) advising on P2P agreements (article 53(2)) [see note 9 to Table 1]18

(jb) advising on conversion or transfer of pension benefits (article 53E) is contained in the permission of advising on pension transfers and pension opt-outs [see note 4 to Table 1]18

(k) sending dematerialised instructions (article 45(1))

(l) causing dematerialised instructions to be sent (article 45(2))

2

(m) [deleted]14

(ma) managing a UCITS (article 51ZA);14

(mb) acting as trustee or depositary of a UCITS (article 51ZB);14

(mc) managing an AIF (article 51ZC);

For the purposes of the permission regime, this regulated activity is subdivided into:

(i) managing an AIF where the AIF is an authorised AIF; and

(ii) managing an AIF where the AIF is an unauthorised AIF.14

(md) acting as trustee or depositary of an AIF (article 51ZD);

For the purposes of the permission regime, this regulated activity is subdivided into:

(i) acting as trustee or depositary of an AIF where the AIF is an authorised AIF; and

(ii) acting as trustee or depositary of an AIF where the AIF is an unauthorised AIF.14

(me) establishing, operating or winding up a collective investment scheme (article 51ZE);14

(n) [deleted]14

(na) [deleted]14

(o) [deleted]14

(p) establishing, operating or winding up a stakeholder pension scheme (article 52(a)3)

14 12 14 14

[see note 5 to Table 1]

(pa2) providing basic advice on a stakeholder product (article 52B)

(p-a) establishing, operating or winding up a personal pension scheme (article 52(b))3

2

those specified investments that are also a stakeholder product [see note 7]

Insurance mediation activity [see note 5A to Table 1]

(pb2) dealing in investments as agent (article 21)

(pc2) arranging (bringing about) deals in investments (article 25(1))

(pd2) making arrangements with a view to transactions in investments (article 25(2))

(pe2) assisting in the administration and performance of a contract of insurance (article 39A)

(pf2) advising on investments (except P2P agreements)18 (article 53(1)18)

For the purpose of the permission regime, this regulated activity is sub-divided into:

2 2 2 2 2

life policy [see note 5B to Table 1]

non-investment insurance contract [see note 5C to Table 1]2

rights to or interests in investments (article 89) in so far as they relate to a life policy

2 2

The Lloyd's market

20

(q) advising on syndicate participation at Lloyd's (article 56)

membership of a Lloyd's syndicate (article 86(2))

(r) [deleted]20

20
20

(s) arranging (bringing about) deals in investments (article 25(1))

(t) making arrangements with a view to transactions in investments (article 25(2))

underwriting capacity of a Lloyd's syndicate (article 86(1))

membership of a Lloyd's syndicate (article 86(2))

rights to or interests in investments (article 89) in so far as they relate to underwriting capacity of a Lloyd's syndicate or membership of a Lloyd's syndicate

Funeral plan providers

(u) entering as provider into a funeral plan contract (article 59) [see note 1A to Table 1]

funeral plan contract (article 87)

Regulated home finance 4 activity

4

(v) arranging (bringing about) regulated mortgage contracts (article 25A(1)4 and (2A)15)

(w) making arrangements with a view to regulated mortgage contracts (article 25A(2)4)

(x) advising on regulated mortgage contracts (article 53A)

(xa) [deleted]17

(y) entering into a regulated mortgage contract (article 61(1))

(z) administering a regulated mortgage contract (article 61(2))

4 4 15

regulated mortgage contract (article 88)17

15

4(za) arranging (bringing about) a home reversion plan (article 25B(1))

(zb) making arrangements with a view to a home reversion plan (article 25B(2))

(zc) advising on a home reversion plan (article 53B)

(zd) entering into a home reversion plan (article 63B(1))

(ze) administering a home reversion plan (article 63B(2))

rights under a home reversion plan (article 88A)

4(zf) arranging (bringing about) a home purchase plan (article 25C(1))

(zg) making arrangements with a view to a home purchase plan (article 25C(2))

(zh) advising on a home purchase plan (article 53C)

(zi) entering into a home purchase plan (article 63F(1))

(zj) administering a home purchase plan (article 63F(2))

rights under a home purchase plan (article 88B)

(zk) arranging (bringing about) a regulated sale and rent back agreement (article 25E(1))9

(zl) making arrangements with a view to a regulated sale and rent back agreement (article 25E(2))9

(zm) advising on a regulated sale and rent back agreement (article 53D))9

(zn) entering into a regulated sale and rent back agreement (article 63J(1))9

(zo) administering a regulated sale and rent back agreement (Article 63(J)(2))9

rights under a regulated sale and rent back agreement (Article 88C)913

13 Credit-related regulated activity

(zp) entering into a regulated credit agreement as lender (article 60B(1))

(zq) exercising, or having the right to exercise, the lender's rights and duties under a regulated credit agreement (article 60B(2))

(zr) credit broking (article 36A)

(zs) operating an electronic system in relation to lending (article 36H)

(zt) debt adjusting (article 39D(1))

(zu) debt counselling (article 39E(1))

(zv) debt collecting (article 39F(1))

(zw) debt administration (article 39G(1))

(zwa) advising on regulated credit agreements for the acquisition of land (article 53DA)17

Rights under a credit agreement (article 88D) (see note 9 to Table 1), except for (zwa): see note 11 to Table 117

(zx) entering into a regulated consumer hire agreement as owner (article 60N(1))

(zy) exercising, or having the right to exercise, the owner's rights and duties under a regulated consumer hire agreement (article 60N(2))

(zz) credit broking (article 36A)

(zaa) debt adjusting (article 39D(2))

(zab) debt counselling (article 39E(2))

(zac) debt collecting (article 39F(2))

(zad) debt administration (article 39G(2))

Rights under a consumer hire agreement (article 88E)

(zae) providing credit information services (article 89A)

(zaf) providing credit references (article 89B)

(see note 10 to Table 1)

3 Table

Notes to Table 1

Note 1:

In addition to the regulated activities listed in Table 1, article 64 of the Regulated Activities Order specifies that agreeing to carry on a regulated activity is itself a regulated activity in certain cases. This applies in relation to all the regulated activities listed in Table 1 apart from:

8

Permission to carry on the activity of agreeing to carry on a regulated activity will be given automatically by the FCA20 in relation to those other regulated activities for which an applicant is given permission (other than those activities in articles 9B, 51 and 52 detailed above).

20 20 20

Note 1A:

Funeral plan contracts are contractually based investments. Accordingly, the following are regulated activities when carried on in relation to a funeral plan contract: (a) arranging (bringing about) deals in investments, (b) making arrangements with a view to transactions in investments, (c) managing investments, (d) safeguarding and administering investments, (e) advising on investments (except P2P agreements)18, (f) sending dematerialised instructions and (g) causing dematerialised instructions to be sent (as well as agreeing to carry on each of the activities listed in (a) to (g)). However, they are not designated investment business.

Note 1B:

Life policies are contractually based investments. Where the regulated activities listed as designated investment business in (e) to (g) and (j) are carried on in relation to a life policy, these activities also count as 'insurance mediation activities'. The full list of insurance mediation activities is set out in (pb)2 to (pf)2. The regulated activities of agreeing to carry on each of these activities will, if carried on in relation to a life policy, also come within both designated investment business and insurance mediation activities.

2 2

11Note 1C:

Although MiFID business bidding (part of bidding in emissions auctions) is designated investment business, it is not separately listed in this table under designated investment business because bidding in emissions auctions is already referred to above.

Note 2:

For the purposes of the regulated activities of dealing in investments as principal (article 14) and dealing in investments as agent (article 21), the definition ofcontractually based investments [expanded in Table 3] excludes a funeral plan contract (article 87) and rights to or interests in funeral plan contracts.

6Note 2A:

PERG 13 Ann 2 Table 2 contains a map indicating which securities and contractually based investments correspond to financial instruments. A firm'spermission should comprise each of the categories of security and contractually based investment in relation to which it carries on the activity of operating a multilateral trading facility.

Note 3:

The regulated activities of managing investments (article 37) and safeguarding and administering investments (article 40) may apply in relation to any assets, in particular circumstances, if the assets being managed or safeguarded and administered include, (or may include), any

security or contractually based investment.

Note 4:

For the purposes of the permission regime, the activity in (j)(ii) of advising on pension transfers and pension opt-outs includes the following two regulated activities:16(1) advising on investments (except P2P agreements)18 where it 16 is carried on in respect of the following specified investments:

Note 5:

Article 4(2) of the Regulated Activities Order specifies the activities (ma)14to (p) for the purposes of section 22(1)(b) of the Act. That is, these activities will be regulated activities if carried on in relation to any property and are not expressed as relating to a specified investment.

14

Note 5A:

Where they are carried on in relation to a life policy, the activities listed as insurance mediation activities in (pb)2 to (pf)2 (as well as the regulated activity of agreeing to carry on those activities) are also designated investment business.

2 2

Note 5B:

In PERG, life policy5 is the term used in the Handbook to mean 'qualifying contract of insurance' (as defined in article 3(1) of the Regulated Activities Order). For the purpose of the permission regime,5 the term also includes a long-term care insurance contract which is a pure protection contract and a pension term assurance policy5.

5 5 5

Note 5C:

Non-investment insurance contract is the term used in firms permissions to mean pure protection contract or general insurance contract.2Pure protection contract is the term used in the Handbook to mean a long-term insurance contract which is not a life policy. General insurance contract is the term used in the Handbook to mean contract of insurance within column 1 of Table 2.2

Note 5D:

[deleted]2

2

Note 5E:

For the purposes of the permission regime, the activity in (pf)2(ii) of advising on pension transfers and pension opt-outs is carried on in respect of the following specified investments:

2

Note 6:

[deleted]20

20

Note 7:

A stakeholder product is defined in the Glossary as:

8Note 8:

Article 4(2) of the Regulated Activities Order specifies the activity at (ab) for the purposes of section 22(1)(b) of the Act, that is, these activities will be regulated activities if carried on in relation to any property and are not expressed as related to a specified investment.

13Note 9:

For the purposes of the permission regime with respect to the regulated activities of entering into a regulated credit agreement as lender and exercising, or having the right to exercise, the lender's rights and duties under a regulated credit agreement, this is sub-divided into:

(i) a regulated credit agreement (excluding high-cost short-term credit, a home credit loan agreement and a bill of sale loan agreement);

(ii) high-cost short-term credit;

(iii) a home credit loan agreement;

(iv) a bill of sale loan agreement.

For the purposes of operating an electronic system in relation to lending, rights under a credit agreement include rights under an article 36H agreement within the meaning of article 36H (4) of the Regulated Activities Order.

For the purposes of advising on P2P agreements, rights under a credit agreement include rights under a relevant article 36H agreement within the meaning of article 53(4) of the Regulated Activities Order.18

13Note 10:

Article 4 (2A) of the Regulated Activities Order specifies the activities (zae) and (zaf) for the purposes of section 22(1A)(a) of the Act (these activities are expressed as relating to information about a person's financial standing rather than to a specified investment) and accordingly will be regulated activities when carried on by way of business.

15Note 11:

The specified investment in relation to which the regulated activity of advising on regulated credit agreements for the acquisition of land (article 53DA) may be carried on, is a regulated credit agreement which meets the description in PERG 2.7.16F G.

204 Table

20 Table 1A: PRA-only regulated Activities [See notes 1 and 2 to Table 1A]

Regulated activity

Specified investment in relation to which the regulated activity (in the corresponding section of column one) may be carried on

Accepting deposits

(a) accepting deposits (article 5)

deposit (article 74)

Insurance business

(b) effecting contracts of insurance (article 10(1))

(c) carrying out contracts of insurance (article 10(2))

contract of insurance (article 75) [expanded in Table 2]

The Lloyd's market

(d) managing the underwriting capacity of a Lloyd's syndicate as a managing agent at Lloyd's (article 57)

underwriting capacity of a Lloyd's syndicate (article 86(1))

(e) the activity of arranging, by the Society, of deals in contracts of insurance written at Lloyd's (article 58)

contract of insurance

205 Table

20Notes to Table 1A

Note 1:

In addition to the regulated activities listed in Table 1A, article 64 of the Regulated Activities Order specifies that agreeing to carry on a regulated activity is itself a regulated activity in certain cases. This only applies in relation to the Lloyd's market activities in paragraphs (d) and (e).

Note 2:

The activity of dealing in investments as principal is also a PRA regulated activity where carried on by a person designated by the PRA.

620 Table

20

Table 2: Contracts of insurance

Contract of insurance (article 75 of the RAO)

(a) general insurance contract (Part I of Schedule 1 to the Regulated Activities Order)

(b) long-term insurance contract (Part II of Schedule 1 to the Regulated Activities Order )

Number

1

Accident (paragraph 1)

life and annuity (paragraph I)

2

Sickness (paragraph 2)

1 marriage or the formation of a civil partnership and birth (paragraph II)

1

3

Land vehicles (paragraph 3)

linked long-term (paragraph III)

4

Railway rolling stock (paragraph 4)

permanent health (paragraph IV)

5

Aircraft (paragraph 5)

tontines (paragraph V)

6

Ships (paragraph 6)

capital redemption (paragraph VI)

7

Goods in transit (paragraph 7)

pension fund management (paragraph VII)

8

fire and natural forces (paragraph 8)

collective insurance (paragraph VIII)

9

damage to property (paragraph 9)

social insurance (paragraph IX)

10

motor vehicle liability (paragraph 10)

11

aircraft liability (paragraph 11)

12

liability of ships (paragraph 12)

13

general liability (paragraph 13)

14

credit (paragraph 14)

15

suretyship (paragraph 15)

16

miscellaneous financial loss (paragraph 16)

17

legal expenses (paragraph 17)

18

assistance (paragraph 18)

20

720 Table

20

Table 3: Securities, contractually based investments and relevant investments [see notes 1 and 2 to Table 3]

Security (article 3(1))

Contractually based investment (article 3(1))

Relevant investments (article 3(1))

share (article 76)

debenture (article 77)

alternative debenture (article 77A)10

government and public security (article 78)

warrant (article 79)

certificate representing certain security (article 80)

unit (article 81)

stakeholder pension scheme (article 82(1)3)

personal pension scheme (article 82(2));3

rights to or interests in investments (article 89) in so far as they relate to any of the above categories of security

option (article 83)

For the purposes of the permission regime, option is subdivided into:

future (article 84)

For the purposes of the permission regime, future is subdivided into:

contract for differences (article 85)

For the purposes of the permission regime, contract for differences is subdivided into:

life policy (but excluding a long-term care insurance contract which is a pure protection contract) [see note 5B to Table 1]

funeral plan contract (article 87) [see note 1A to Table 1]

rights to or interests in investments (article 89) in so far as they relate to any of the above categories of contractually based investment.

contractually based investments (article 3(1))

non-investment insurance contract [see note 5C to Table 1]2

2 2

Notes to Table 3

Note 1:

Security, contractually based investment and relevant investment are not, in themselves, specified investments they are defined as including a number of specified investments as set out in Table 3. Relevant investments is the term that is used to cover contractually based investments together with rights under a general insurance contract and a pure protection contract.

Note 2:

For the purposes of the regulated activities of dealing in investments as principal (article 14) and dealing in investments as agent (article 21), the definition of contractually based investments excludes a funeral plan contract (article 87) and rights to or interests in funeral plan contracts.