Status: Please note you should read all Brexit changes to the FCA Handbook and BTS alongside the main FCA transitional directions. Where these directions apply the 'standstill', firms have the choice between complying with the pre-IP completion day rules, or the post-IP completion day rules. To see a full list of Handbook modules affected, please see Annex B to the main FCA transitional directions.

PERG 5.12 Link between activities and the United Kingdom

Introduction

PERG 5.12.1GRP

Section 19 of the Act (The general prohibition) provides that the requirement to be authorised under the Act only applies in relation to regulated activities which are carried on 'in the United Kingdom'. In many cases, it will be quite straightforward to identify where an activity is carried on. But, when there is a cross-border element, for example because a customer is outside the United Kingdom or because some other element of the activity happens outside the United Kingdom, the question may need careful consideration. 7

PERG 5.12.2GRP

Even if a person concludes that he is not carrying on a regulated activity in the United Kingdom, he will need to ensure that he does not contravene other provisions of the Act that apply to unauthorised persons. These include the controls on financial promotion (section 21 (Financial promotion) of the Act) (see PERG 8 (Financial promotion and related activities)), and on giving the impression that a person is authorised (section 24 (False claims to be authorised or exempt)).

PERG 5.12.3GRP

The table in PERG 5.12.4 G is a very simplified summary of territorial issues relating to overseas insurance intermediaries carrying on the business of insurance distribution activities5 in or into the United Kingdom for remuneration.

PERG 5.12.4GRP

Table Territorial issues relating to overseas insurance intermediaries carrying on insurance distribution activities5 in or into the United Kingdom

Needs Part 4A permission

6

Overseas persons exclusion available

6

6

6

6

6

6

6

6

Third country intermediary operating from branch in the UK

Yes

6

No

Third country intermediary providing services in (or into) the UK

Yes unless overseas persons exclusion applies

6

Potentially available

6

6

35

Where are insurance distribution activities carried on?

PERG 5.12.5GRP

Persons carrying on insurance distribution activities5 from a registered office or head office in the United Kingdom will clearly be carrying on regulated activities in the United Kingdom. However, a person may be considered to be carrying on regulated activities in the United Kingdom even where not carrying on the activity from a registered office or head office in the United Kingdom. This is explained further in PERG 5.12.6 G to PERG 5.12.8 G.

PERG 5.12.6GRP

In determining the location of an activity, and hence whether it is carried on in the United Kingdom, various factors need to be taken into account in turn, notably:

  1. (1)

    section 418 of the Act (Carrying on regulated activities in the United Kingdom);

  2. (2)

    the nature of the activity; and

  3. (3)

    the overseas persons exclusion (see PERG 5.12.9 G to PERG 5.12.10 G (Overseas persons)).

PERG 5.12.7GRP

Section 418 of the Act extends the meaning that 'carry on regulated activity in the United Kingdom' would normally have by setting out additional cases in which a person who would not otherwise be regarded as carrying on the activity in the United Kingdom is to be regarded as doing so. Each of the following cases thus amounts to carrying on a regulated activity in the United Kingdom:

  1. (1)

    [deleted]6

  2. (2)

    where a UK-based person carries on a regulated activity and the day-to-day management of the activity is the responsibility of an establishment in the United Kingdom;

  3. (3)

    where a regulated activity is carried on by a person who is not based in the United Kingdom but is carried on from an establishment maintained by him in the United Kingdom; and

  4. (4)

    [deleted]6

In each of these cases it is irrelevant where the person with whom the activity is carried on is situated.

PERG 5.12.8GRP

Otherwise, where the cases in PERG 5.12.7G (1) do not apply, it is necessary to consider further the nature of the activity in order to determine where insurance distribution5 is carried on. Persons that arrange contracts of insurance will usually be considered as carrying on the activity of arranging in the location where these activities take place. As for dealing activities, the location of the activities will depend on factors such as where the acceptance takes place, which in turn will depend on the method of communication used. In the case of advising, this is generally considered to take place where the advice is received.

Overseas persons

PERG 5.12.9GRP

Article 72 of the Regulated Activities Order (Overseas persons) provides a potential exclusion for persons with no permanent place of business in the United Kingdom from which regulated activities are conducted or offers to conduct regulated activities are made. Where these persons carry on insurance distribution activities5 in the United Kingdom, they may be able to take advantage of the exclusions in article 72 of the Regulated Activities Order. In general terms, these apply where the overseas person either:

  1. (1)

    deals or arranges deals with or through authorised or exempt persons only; or

  2. (2)

    enters into deals with (or on behalf of) a person in the United Kingdom or gives advice on investments in the United Kingdom, in each case as a result of a 'legitimate approach'.

A 'legitimate approach', for the purposes of (2), is one that results from an unsolicited approach by a person (for example, a customer) or otherwise is a result of an approach by, or on behalf of, an overseas person which complies with the restriction on financial promotion under section 21 of the Act (see PERG 8.3.1 G (Financial promotion)).

PERG 5.12.10GRP

The overseas person exclusion is available to persons who do not have a permanent place of business in the United Kingdom and so is of relevance to third country intermediaries 6who carry on insurance distribution activities5 in, or into, the United Kingdom (for example with or through authorised insurance brokers and insurance undertakings operating in the Lloyd's market).

How should persons be authorised?

PERG 5.12.11GRP

UK-based persons must obtain Part 4A permission in relation to their insurance distribution activities5 in the United Kingdom as one of the following:

  1. (1)

    a body corporate whose registered office is situated in the United Kingdom; or

  2. (2)

    a partnership or unincorporated association whose head office is situated in the United Kingdom; or

  3. (3)

    an individual (that is, a sole trader) whose residence is situated in the United Kingdom.

5
PERG 5.12.12GRP

Non-UK-based persons wishing to carry on insurance distribution activities5 in the United Kingdom must:

  1. (1)

    [deleted]6

  2. (2)

    make use of the overseas persons exclusion (which then has the effect that activities are deemed not to be regulated activities carried on in the United Kingdom); or

  3. (3)

    seek Part 4A permission.

Passporting

PERG 5.12.13GRP

[deleted]6

5455451
PERG 5.12.14GRP

Non-UK-based6 insurance intermediaries wishing to establish a branch in the UK for the purpose of carrying on insurance distribution activities5 may only do so with Part 4A permission.

E-Commerce Directive

PERG 5.12.15GRP

[deleted]6

2
PERG 5.12.16GRP

[deleted]6

555
PERG 5.12.17GRP

[deleted]6

555