PROF 1 Professional firms

This sourcebook is also relevant to designated professional bodies.

Under Part XX of the Act (Provision of Financial Services by Members of the Professions) certain individuals, partnerships or corporate entities, known as exempt professional firms, can carry on particular regulated activities (which the Act terms exempt regulated activities) under supervision and regulation by designated professional bodies.

This sourcebook outlines:

1. (1)

   the arrangements for designation of professional bodies;

2. (2)

   the conditions for activities to be treated as exempt regulated activities (see PROF 2.1.3 G);

3. (3)

   the FCA's duty to keep itself informed about how designated professional bodies supervise and regulate the exempt regulated activities of exempt professional firms and how exempt professional firms carry on exempt regulated activities;

4. (4)

   the FCA's power under section 328 of the Act (Directions in relation to the general prohibition) to make a direction to deny the exemption to different classes of person or to different descriptions of regulated activity;

5. (5)

   the implications for an authorised professional firm that carries on an non-mainstream regulated activities; and

6. (6)

   the arrangements made by the FCA in relation maintaining a record of unauthorised persons, including exempt professional firms, that carry on, or are proposing to carry on, insurance distribution activity.

This sourcebook also contains disclosure rules made by the FCA under the power conferred by section 332(1) of the Act (Rules in relation to persons to whom the general prohibition does not apply). These rules apply to exempt professional firms for the purpose of ensuring that their clients are made aware that exempt professional firms are not authorised persons.

The rules and guidance in this sourcebook are intended to:

1. (1)

   assist the protection of clients of exempt professional firms by ensuring that the FCA has information which allows it to keep under review the exercise of the direction power under section 328 of the Act (see PROF 1.1.4 G (4));

2. (2)

   secure an appropriate degree of protection for consumers by ensuring that the clients of an exempt professional firm are made aware that the firm is not an authorised person;

3. (3)

   enable the FCA to use its resources in an efficient and effective way in the collection of information relevant to its duty to keep itself informed under 325 of the Act (FCA's general duty); and

4. (4)

   explain the background to and the arrangements made by the FCA for the registration of unauthorised persons, including exempt professional firms, that carry on, or are proposing to carry on, insurance distribution activity.

Professional firms should refer to PERG 8 (Financial promotion and related activities) for general guidance on financial promotion and to PERG 8.15 (Financial promotions by members of the professions (articles 55 and 55A)) for guidance on the exemptions which are specifically intended for professional firms.