PROF 1.1 Application and Purpose

Application

PROF 1.1.1 R

This sourcebook applies as follows:

  1. (1)

    PROF 1 to PROF 4 apply to exempt professional firms;

  2. (2)

    PROF 5 applies to authorised professional firms; and4

  3. (3)

    [deleted]4

    4
  4. (4)

    PROF 7 applies to every designated professional body and every exempt professional firm that is carrying on, or proposing to carry on, insurance distribution activity8.

    31
PROF 1.1.1A R

5This sourcebook does not apply to an incoming ECA provider acting as such.

PROF 1.1.2 G

This sourcebook is also relevant to designated professional bodies.

Purpose

PROF 1.1.3 G

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.

PROF 1.1.4 G

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; and3

  6. (6)

    the arrangements made by the FCA for complying with its obligations under the IDD8 in relation to:3

    55
    1. (a)

      maintaining a record of unauthorised persons, including exempt professional firms, that carry on, or are proposing to carry on, insurance distribution activity8; and

      3
    2. (b)

      exempt professional firms that wish to passport under the IDD8.

      553
PROF 1.1.5 G

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.

PROF 1.1.6 G

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 FCA9 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));

    9
  2. (2)

    secure an9 appropriate degree of protection for consumers7 by ensuring that the clients of an exempt professional firm are made aware that the firm is not an authorised person; 3

    79
  3. (3)

    enable the FCA9 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's9 general duty); and3

    99
  4. (4)

    explain the background to and the arrangements made by the FCA9 for:3

    9
    1. (a)

      the registration of unauthorised persons, including exempt professional firms, that carry on, or are proposing to carry on, insurance distribution activity8; and

      3
    2. (b)

      authorised professional firms and exempt professional firms that wish to exercise their EEA right under the IDD8 to establish a branch or provide cross border services in another EEA State.3

      55
PROF 1.1.7 G

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.2