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Status: You are viewing the version of the handbook as on 2018-01-03.

PERG 8.24 Advising on investments

3[Note: The guidance in PERG 8.24 to PERG 8.29 on the regulated activity of advising on investments (except P2P agreements) does not take into account the amendments to article 53(1) of the Regulated Activities Order made by the Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) (No. 2) Order 2017 (SI 2017/500) and paragraph 2 of Schedule 3 to the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017 (SI 2017/701) which came into force on 3 January 2018.]
PERG 8.24.1GRP

Under article 53(1)1 of the Regulated Activities Order, advising on investments (except P2P agreements)1 covers advice which:

  1. (1)

    is given to a person in his capacity as an investor or potential investor, or in his capacity as agent for an investor or a potential investor; and

  2. (2)

    is advice on the merits of his (whether as principal or agent) buying, selling, subscribing for or underwriting a particular investment which is a security, structured deposit2 or a relevant investment or exercising any right conferred by such an investment to buy, sell, subscribe for or underwrite such an investment.

PERG 8.24.2GRP

The effect of advice being given in the circumstances referred to in PERG 8.24.1 G is that:

  1. (1)

    it must relate to an investment which is a security, structured deposit2 or a relevant investment;

  2. (2)

    that investment must be a particular investment;

  3. (3)

    it must be given to persons in their capacity as investors or potential investors;

  4. (4)

    it must be advice (that is, not just information); and

  5. (5)

    it must relate to the merits of investors or potential investors (or their agents) buying, selling, subscribing for or underwriting (or exercising rights to acquire, dispose of or underwrite) the investment.

PERG 8.24.3GRP

Each of the aspects referred to in PERG 8.24.2 G is considered in greater detail in PERG 8.25 to PERG 8.29. In addition, under article 52A of the Regulated Activities Order, providing basic advice on a stakeholder product is a regulated activity and under article 56 of the Regulated Activities Order, advising a person to become, or continue or cease to be a member of a particular Lloyd’s syndicate is a regulated activity.