PERG 5.2 Introduction

PERG 5.2.1 G RP

[deleted]4

Requirement for authorisation or exemption

PERG 5.2.2 G RP

Any person who carries on a regulated activity in the United Kingdom by way of business must either be an authorised person or exempt from the need for authorisation. Otherwise, the person commits a criminal offence and certain agreements may be unenforceable. PERG 2.2 (Authorisation and regulated activities) has further guidance on these consequences.

2

Questions to be considered to decide if authorisation is required

PERG 5.2.3 G RP

A person who is concerned to know whether their proposed insurance distribution activities4 may require authorisation will need to consider the following questions:4

  1. (1)

    will the activities relate to contracts of insurance (see PERG 5.3(Contracts of insurance))?

  2. (2)

    if so, will I be carrying on any insurance distribution activity4 (see PERG 5.5 (The regulated activities: dealing in contracts as agent) to PERG 5.11 (Other aspects of exclusions))?

  3. (3)

    if so, will I be carrying on my activities by way of business (see PERG 5.4 (The business test))?

  4. (4)

    if so, is there the necessary link with the United Kingdom (see PERG 5.12 (Link between activities and the United Kingdom))?

  5. (5)

    if so, will any or all of my activities be excluded (see PERG 5.3.7 G (Connected contracts of insurance) to PERG 5.3.8 G (Large risks); PERG 5.6.4AG4 (Exclusions for the provision of information: article 33B and 72C4) to PERG 5.6.23 G (Other exclusions); PERG 5.7.7 G (Exclusions); PERG 5.8.24 G (Exclusion: periodical publications, broadcasts and web-sites) to PERG 5.8.26 G (Other exclusions); PERG 5.11 (Other aspects of exclusions) and PERG 5.12.9 G to PERG 5.12.10 G (Overseas persons))?

  6. (6)

    if it is not the case that all of my activities are excluded, am I a professional firm whose activities are exempted under Part XX of the Act (see PERG 5.14.1 G to PERG 5.14.4 G (Professionals))?

  7. (7)

    if not, am I exempt as an appointed representative (see PERG 5.13 (Appointed representatives))?

  8. (8)

    if not, am I otherwise an exempt person (see PERG 5.14.5 G (Other exemptions))?

If a person gets as far as question (8) and the answer to that question is "no", that person requires authorisation and should refer to the FCA website page “How to apply4 for authorisation”: www.fca.org.uk/firms/authorisation/apply-authorisation for details of the application process.2 The order of these questions considers firstly whether a person is carrying on insurance distribution activities4 before dealing separately with the questions "will I be carrying on my activities by way of business?" (3) and "if so, will any or all of my activities be4 excluded?" (5).

2
PERG 5.2.4 G RP

It is recognised pursuant to section 22 of the Act that a person will not be carrying on regulated activities in the first instance, including insurance distribution activities4, unless the person is4 carrying on these activities by way of business. Similarly, where a person's activities are excluded that person4 cannot, by definition, be carrying on regulated activities. To this extent, the content of the questions above does not follow the scheme of the Act. For ease of navigation, however, the questions are set out in an order and form designed to help persons consider more easily, and in turn, issues relating to:

  1. (1)

    the regulated activities4;

  2. (2)

    the business test; and

  3. (3)

    the exclusions.

Approach to implementation of the IDD

PERG 5.2.5 G RP

The IDD4 imposes requirements upon EEA States relating to the regulation of insurance distribution and reinsurance distribution4. The IDD defines “insurance distribution4 as including the activities of advising on4, proposing or carrying out other work preparatory to the conclusion of contracts of insurance4, or of concluding such contracts, or of assisting in the administration and performance of such contracts, in particular in the event of a claim. It includes the provision of information concerning one or more insurance contracts in accordance with criteria selected by customers through a website or other media and the compilation of an insurance product ranking list, including price and product comparison, or a discount on the price of an insurance contract, when the customer is able to directly or indirectly conclude an insurance contract using a website or other media. Reinsurance distribution is similarly defined (excluding the price comparison website activities).4 (The text of IDD articles 2.1(1), 2.1(2) and 2.2 is reproduced in full in PERG 5.16.2G4).

PERG 5.2.6 G RP

The United Kingdom has implemented the IDD (and the IMD before it)4, in part, through secondary legislation, which applies4 pre-existing regulated activities (slightly amended) in the Regulated Activities Order to the component elements of the insurance distribution and reinsurance distribution definitions in the IDD4 (see PERG 5.2.5 G and the text of IDD articles 2.1(1), 2.1(2) and 2.24 in PERG 5.16.2G4).

PERG 5.2.7 G RP

[deleted]4

PERG 5.2.8 G RP

As a result,4 each of the regulated activities below potentially applies4 to any contract of insurance:

  1. (1)

    dealing in investments as agent (article 21 (Dealing in investments as agent));

  2. (2)

    arranging (bringing about) deals in investments (article 25(1) (Arranging deals in investments));

  3. (3)

    making arrangements with a view to transactions in investments (article 25(2) (Arranging deals in investments));

  4. (4)

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

  5. (5)

    advising on investments (except P2P agreements) (article 53(1)3 (Advising on investments));

  6. (6)

    agreeing to carry on any of the above regulated activities (article 64 (Agreeing to carry on specified types of activity)).

PERG 5.2.9 G RP

It is the scope of the Regulated Activities Order rather than the IDD4 which will determine whether a person requires authorisation or exemption. However, the scope of the IDD4 is relevant to the application of certain exclusions under the Regulated Activities Order (see, for example, the commentary on article 67 in PERG 5.11.9 G (Activities carried on in the course of a profession or non-investment business)).

Financial promotion

PERG 5.2.10 G RP

An unauthorised person who intends to carry on activities connected with contracts of insurance will need to comply with section 21 of the Act (Restrictions on financial promotion). This guidance does not cover financial promotions that relate to contracts of insurance. Persons should refer to the general guidance on financial promotion in PERG 8 (Financial promotion and related activities). (See in particular PERG 8.17A (Financial promotions concerning insurance distribution4 activities) for information on financial promotions that relate to insurance distribution activities4.)