PROF Professional Firms

PROF 1

Professional firms

PROF 1.1

Application and Purpose

01/12/2004

Application

PROF 1.1.1

This sourcebook applies as follows:

(1) PROF 1 to PROF 4 apply to exempt professional firms;
(2) PROF 5 applies to authorised professional firms; and
(3) [deleted]
(4) PROF 7 applies to every designated professional body and every exempt professional firm that is carrying on, or proposing to carry on, insurance mediation activity.

01/01/2006

PROF 1.1.2

This sourcebook is also relevant to designated professional bodies.

01/12/2001

Purpose

PROF 1.1.3

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.

01/12/2001

PROF 1.1.4

This sourcebook outlines:

(1) the arrangements for designation of professional bodies;
(2) the conditions for activities to be treated as exempt regulated activities (see PROF 2.1.3 G);
(3) the FSA'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) the FSA'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) the implications for an authorised professional firm that carries on an non-mainstream regulated activities; and
(6) the arrangements made by the FSA for complying with its obligations under the IMD in relation to:

(a) maintaining a record of unauthorised persons, including exempt professional firms, that carry on, or are proposing to carry on, insurance mediation activity; and
(b) exempt professional firms that wish to passport under the IMD .

01/12/2001

PROF 1.1.5

This sourcebook also contains disclosure rules made by the FSA 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.

01/12/2001

PROF 1.1.6

The rules and guidance in this sourcebook are intended to:

(1) assist the protection of clients of exempt professional firms by ensuring that the FSA 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) promote public understanding of the financial system by ensuring that the clients of an exempt professional firm are made aware that the firm is not an authorised person;
(3) enable the FSA to use its resources in an efficient and effective way in the collection of information relevant to its duty to keep itself informed under section 325 of the Act (Authority's general duty); and
(4) explain the background to and the arrangements made by the FSA for:

(a) the registration of unauthorised persons, including exempt professional firms, that carry on, or are proposing to carry on, insurance mediation activity; and
(b) authorised professional firms and exempt professional firms that wish to exercise their EEA right under the IMD to establish a branch or provide cross border services in another EEA State.

01/12/2001

PROF 1.1.7

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.

01/06/2002

PROF 2

Status of exempt professional firm

PROF 2.1

Designated professional bodies and exempt regulated activities

01/12/2004

Designated professional bodies

PROF 2.1.1

The Treasury designates professional bodies. Section 326 of the Act (Designation of professional bodies) sets out the conditions a body must satisfy before it can be designated.

01/12/2001

PROF 2.1.2

The professional bodies that have been designated by the Treasury are listed in PROF 2 Annex 1 G.

01/12/2001

Exempt regulated activities

PROF 2.1.3

Section 327 of the Act (Exemption from the general prohibition) sets out the conditions which must be met for a person to be treated as an exempt professional firm, and for the person's regulated activities to be treated as exempt regulated activities. If the exemption in section 327 does not apply to a person and the person carries on a regulated activity, the person may contravene the general prohibition and be committing a criminal offence. The FSA's approach to the use of its powers in respect of alleged contraventions of the general prohibition is explained in EG 12.

28/08/2007

PROF 2.1.4

If the FSA has made a direction under section 328 of the Act (Directions in relation to the general prohibition) (see PROF 3.2) in relation to classes of person (or regulated activity), then a person within the class (or carrying on the regulated activity) specified will not be an exempt professional firm. In addition, section 329 of the Act (Orders in relation to the general prohibition) gives the FSA power to make an order disapplying the Part XX exemption from a person named in the Order. The FSA's general approach to the use of this power is explained in EG 16.

28/08/2007

PROF 2.1.5

Section 327(2) provides that an exempt professional firm must be a member of a profession or be controlled or managed by one or more members.

01/12/2001

PROF 2.1.6

The effect of section 327(7) of the Act is that an exempt professional firm can carry on regulated activities in that capacity or as an exempt person but not otherwise. Therefore, an exempt professional firm cannot be an authorised person.

01/12/2001

PROF 2.1.7

The Act does not, however, prevent an exempt professional firm from carrying on, in addition to exempt regulated activities, any regulated activities in relation to which it is an exempt person. For example, it is possible for an exempt professional firm to carry on regulated activities as an appointed representative.

01/12/2001

PROF 2.1.8

Section 327 also sets out the conditions which determine the particular regulated activities an exempt professional firm may carry on.

01/12/2001

PROF 2.1.9

Section 327(6) of the Act gives the Treasury power to make an order specifying activities, or activities relating to specified investments, that a person cannot carry on as an exempt professional firm. The relevant order is listed in PROF 2 Annex 2 G.

01/12/2001

PROF 2.1.10

Section 332(3) of the Act requires a designated professional body to make rules that define the particular regulated activities which its members are allowed to carry on. Section 332(4) of the Act provides that those rules must be designed to secure that, in providing a particular professional service to a particular client, a member must carry on only regulated activities which arise out of, or are complementary to, the provision by the member of that professional service to the client.

01/12/2001

PROF 2.1.11

The FSA is required to approve the rules designated professional bodies make under section 332(3) of the Act. These rules must be in place in order to allow a person to be an exempt professional firm. They add to the other conditions within section 327 but do not override them, and a firm may need to refer to section 327 if it is in doubt whether an activity is an exempt regulated activity.

01/12/2001

PROF 2.1.12

Section 327(3) deals with the treatment by a firm of a pecuniary reward or other advantage received from anyone other than the firm's client. For a regulated activity to be treated as an exempt regulated activity, the firm must account to its client for any such receipt. The FSA considers this to mean that an exempt professional firm must hold to the order of its client any such reward or other advantage that it receives.

01/12/2001

PROF 2.1.13

Section 327(4) states that the manner of the provision of any service in the course of carrying on regulated activities must be incidental to the provision by the exempt professional firm of professional services. For this purpose, professional services are services which do not constitute carrying on a regulated activity, and the provision of which is supervised and regulated by a designated professional body.

01/12/2001

PROF 2.1.14

The FSA considers that to satisfy the condition in section 327(4) regulated activities cannot be a major part of the practice of the firm. The FSA also considers the following further factors to be among those that are relevant:

(1) the scale of regulated activity in proportion to other professional services provided;
(2) whether and to what extent activities that are regulated activities are held out as separate services; and
(3) the impression given of how the firm provides regulated activities, for example through its advertising or other promotions of its services.

01/12/2001

PROF 2.1.15

The FSA's view is that, in the context of section 327 as an exemption from the general prohibition, the conditions in section 327 should be interpreted as not imposing any restriction on the regulated activities that an exempt professional firm may carry on outside the United Kingdom. For further guidance on when a regulated activity is carried on 'in the United Kingdom', exempt professional firms are referred to section 418 of the Act and the guidance in PERG 2.4 (Link between activities and the United Kingdom).

06/10/2007

PROF 2 Annex 1

Status of exempt professional firm G

01/12/2004

PROF 2 Annex 1.1

On 28 March 2001 the following professional bodies were designated by the Treasury under section 326(1) of the Act:

the Law Society of England & Wales

the Law Society of Scotland

the Law Society of Northern Ireland

the Institute of Chartered Accountants in England and Wales

the Institute of Chartered Accountants of Scotland

the Institute of Chartered Accountants in Ireland

the Association of Chartered Certified Accountants

the Institute of Actuaries.

On 14 January 2005, the Council for Licensed Conveyancers was designated by the Treasury under section 326(1) of the Act.

On 10 February 2006, the Royal Institution of Chartered Surveyors was designated by the Treasury under section 326(1) of the Act.

06/07/2006

PROF 2 Annex 2

Status of exempt professional firm G

01/12/2004

PROF 2 Annex 2.1

Non Exempt activities orders under section 327(6) of the Act (see PROF 2.1.9 G)

As at 31 October 2004, the Treasury had made the following orders under section 327(6):

The Financial Services and Markets Act 2000 (Professions) (Non-Exempt Activities) Order 2001 (SI 2001/1227), as amended by: article 3 of the Financial Services and Markets Act 2000 (Miscellaneous Provisions) Order 2001 (SI 2001/3650); article 7 of the Financial Services and Markets act 2000 (Regulated activities) (Amendment) Order 2002 (SI 2002/682); article 3 of the Financial Services and Markets Act 2000 (Commencement of Mortgage Regulation) (Amendment) Order 2002 (SI 2002/1777); article 24 of the Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) (No 1) Order 2003 (SI 2003/1475), and article 16 of the Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) (No 2) Order 2003 (SI 2003/1476).

14/01/2005

PROF 3

The FSA's duties and powers

PROF 3.1

The FSA's duty to keep itself informed

01/12/2004

PROF 3.1.1

Section 325 of the Act (Authority's general duty) imposes on the FSA a duty to keep itself informed about:

(1) the way in which designated professional bodies supervise and regulate the carrying on of exempt regulated activities by exempt professional firms; and
(2) the way in which exempt professional firms carry on exempt regulated activities.

01/12/2001

PROF 3.1.2

The FSA keeps itself informed in a number of ways. A designated professional body has a duty under section 325(4) of the Act to cooperate with the FSA. Article 94 of the Regulated Activities Order requires each designated professional body to provide the FSA with the information it needs to maintain a public record of persons that are registered with the FSA to conduct insurance mediation activity. The FSA has made arrangements with each of the designated professional bodies about the information they provide to it, to include information about:

(1) complaints and redress arrangements;
(2) complaints volumes and their analysis;
(3) disciplinary action;
(4) supervisory activity;
(5) the activities carried on by exempt professional firms, the risks arising from them and how they are mitigated, for example by monitoring activity or training and competence arrangements; and
(6) the names and addresses of each of their exempt professional firms that carry on, or are proposing to carry on, insurance mediation activity, together with the details of the individuals within the management of the exempt professional firms who are responsible for the insurance mediation activity and, where relevant, the passporting information required by the FSA for the purposes of paragraph 25 of Schedule 3 to the Act (EEA Passport Rights).

01/12/2001

PROF 3.1.3

Information may also be obtained from exempt professional firms, government departments, trade bodies, consumer organisations and clients of exempt professional firms. The FSA may also commission or carry out reviews of the supervisory and regulatory activities of a designated professional body and commission or carry out research about, or surveys of, exempt professional firms or their clients.

01/12/2001

PROF 3.2

The FSA's power to make a direction

01/12/2004

PROF 3.2.1

Section 328 of the Act (Directions in relation to the general prohibition) gives the FSA power to make a direction that the exemption under section 327 of the Act (see PROF 2.1.3 G) does not apply to the extent specified in the direction. Section 328 allows the FSA to make a direction in relation to different classes of person or different descriptions of regulated activity. Section 325(3) of the Act requires the FSA to keep under review the desirability of exercising its powers under Part XX of the Act (Provision of Financial Services by Members of the Professions), including its direction powers under section 328 of the Act.

14/01/2005

PROF 3.2.2

If the FSA gives a direction in relation to specified classes of person, then any person within those classes may be in contravention of the general prohibition unless:

(1) it ceases to carry on regulated activities; or
(2) it is an authorised person; or
(3) it is an exempt person.

01/12/2001

PROF 3.2.3

A direction might also cover classes of persons who are members of different designated professional bodies.

01/12/2001

PROF 3.2.4

Were the FSA to give a direction in relation to a description of regulated activity (for example, dealing in investments as agent), then that activity could no longer be carried on within the terms of the exemption.

01/12/2001

PROF 3.2.5

(1) The FSA may exercise its direction powers under section 328(6) of the Act in two situations, as set out in (2) and (3).
(2) First, the FSA may exercise its direction power under section 328(6)(a) of the Act if it is satisfied that it is desirable in order to protect the interests of clients. In considering whether it is satisfied, the FSA is required by section 328(7) of the Act to have regard, among other things, to the effectiveness of any arrangements made by a designated professional body:

(a) for securing compliance with rules made under section 332(1) of the Act (see PROF 4.1.1 G);
(b) for dealing with complaints against its members in relation to the carrying on by them of exempt regulated activities (see PROF 4.1.4 G (2)(d));
(c) in order to offer redress to clients who suffer, or claim to have suffered, loss as a result of misconduct by its members in their carrying on of exempt regulated activities (see PROF 4.1.4 G (2)(d)); and
(d) for cooperating with the FSA under section 325(4) of the Act (see PROF 3.1.2 G).

(3) Second, the FSA may exercise its direction power under section 328(6)(b) of the Act if it is satisfied that it is necessary to do so in order to comply with an obligation imposed by the IMD. For example, the FSA might wish to do so if it was not receiving from a designated professional body the information it needs to maintain the FSA Register (see PROF 7.1).

14/01/2005

PROF 3.2.6

Section 330 of the Act (Consultation) sets out procedures which the FSA must follow if it wishes to make a direction under section 328(6)(a) or (b). Except as specifically provided in section 330:

(1) the FSA must consult publicly on its proposed direction;
(2) the FSA must have regard to any representations made in response to the consultation; and
(3) if the FSA then gives the proposed direction, it must publish an account of the representations made and its response to them.

14/01/2005

PROF 3.2.7

The directions the FSA has made under section 328 (6)(a) are set out in PROF 3 Annex 1 G. Directions made by the FSA under section 328(6)(b) of the Act are listed in PROF 3 Annex 2 G (The FSA's duties and powers).

14/01/2005

PROF 3 Annex 1

The FSA's duties and powers G

01/12/2004

Directions made by the FSA under section 328(6)(a) of the Act (see PROF 3.2.7 G )

As at 31 October 2004, the FSA had made no directions under section 328(6)(a) of the Act.

14/01/2005

PROF 3 Annex 2

The FSA's duties and powers G

14/01/2005

Directions made by the FSA under section 328(6)(b) of the Act (see PROF 3.2.7 G)

As at 31 October 2004, the FSA had made no directions under section 328(6)(b) of the Act.

14/01/2005

PROF 4

Disclosure

PROF 4.1

Disclosure rules

01/12/2004

PROF 4.1.1

The effectiveness of arrangements made by a designated professional body for securing compliance with the rules in this chapter is one of the factors that the FSA must take into account in considering whether to exercise its powers to give a direction under section 328 of the Act (see PROF 3.2.5 G (2) and PROF 3.2.5 G (3).

15/01/2005

PROF 4.1.2

An exempt professional firm must avoid making any representation to a client that:

(1) it is authorised under the Act or regulated by the FSA; or
(2) the regulatory protections provided by or under the Act to a person using the services of an authorised person are available.

01/12/2001

PROF 4.1.3

(1) An exempt professional firm must, before it provides a service which includes the carrying on of a regulated activity in the United Kingdom, other than an insurance mediation activity, with or for a client, disclose in writing to the client in a manner that is clear, fair and not misleading that it is not authorised under the Act.
(2) An exempt professional firm, must, before it provides a service which includes the carrying on of an insurance mediation activity with or for a client, make the following statement in writing to the client in a way that is clear, fair and not misleading and no less prominent than any other information provided to the client at the same time:

"[This firm is]/[We are] not authorised by the Financial Services Authority. However, we are included on the register maintained by the Financial Services Authority so that we can carry on insurance mediation activity, which is broadly the advising on, selling and administration of insurance contracts. This part of our of business, including arrangements for complaints or redress if something goes wrong, is regulated by [DPB]. The register can be accessed via the Financial Services Authority website at

www.fsa.gov.uk/register/home.do."

15/01/2005

PROF 4.1.4

(1) The FSA considers that material provided to satisfy PROF 4.1.3 R (1) and PROF 4.1.3R (2) need not be tailored to the individual client. The disclosures in PROF 4.1.3 R (1) and PROF 4.1.3R (2) may be provided alongside or integrated with other material provided to a client. Exempt professional firms may therefore include the information within engagement letters or client care letters, if they wish.
(2) The FSA considers that it is important that clients understand the implications for them of receiving services from an exempt professional firm that is not authorised under the Act. It is also important that clients understand the implications of the difference between authorisation under the Act and being on the register maintained by the FSA, so that the exempt professional firm can conduct insurance mediation activity, in relation to which activity the regulatory protections established by the Act for the benefit of consumers will not apply. The FSA therefore expects designated professional bodies to make rules covering the information to be provided to clients. These rules should require exempt professional firms to make a disclosure to clients containing the following elements:

(a) where the exempt professional firm conducts a regulated activity other than an insurance mediation activity, a statement that the exempt professional firm is not an authorised person;
(b) the nature of the regulated activities carried on by the exempt professional firm, and the fact that they are limited in scope;
(c) a statement that the exempt professional firm is regulated for these regulated activities by the exempt professional firm's designated professional body, identifying the designated professional body concerned;
(d) the nature of the complaints and redress mechanisms available to clients in respect of these regulated activities; and
(e) where the regulated activity consists of insurance mediation activity, the statement contained at PROF 4.1.3 R (2).

(3) Exempt professional firms should also ensure that any statement that makes reference to the FSA does not lead a client to suppose that the FSA has direct regulatory responsibility for the exempt professional firm. This could be a breach of PROF 4.1.2 R. This consideration is particularly important in relation to insurance mediation activity, where clients may well fail to appreciate the difference between authorisation under the Act and being included on the register maintained by the FSA so as to permit the exempt professional firm to carry on insurance mediation activity.

15/01/2005

PROF 4.1.5

For further guidance on when a regulated activity is carried on 'in the United Kingdom', exempt professional firms are referred to section 418 of the Act and the guidance in PERG 2.4.

01/12/2001

PROF 5

Non-mainstream regulated activities

PROF 5.1

Application and purpose

01/12/2004

Application

PROF 5.1.1

This chapter applies to an authorised professional firm that carries on non-mainstream regulated activities.

01/12/2001

Purpose

PROF 5.1.2

This chapter:

(1) contrasts "exempt regulated activities" with "non-mainstream regulated activities";
(2) sets out the conditions which must be satisfied for a regulated activity of an authorised professional firm to constitute a non-mainstream regulated activity;
(3) refers to other parts of the Handbook in which provisions are disapplied or modified in relation to authorised professional firms when carrying on non-mainstream regulated activities;
(4) gives effect to the Distance Marketing Regulations with respect to the non-mainstream regulated activities of authorised professional firms.

09/10/2004

Exempt regulated activities contrasted with non-mainstream regulated activities

PROF 5.1.3

(1) The FSA's policy is designed to provide so far as possible a level playing field for authorised and unauthorised members of the professions in relation to the carrying on of similar activities.
(2) Subject to conditions (see PROF 2), members of designated professional bodies that are not authorised can carry on particular regulated activities, known as exempt regulated activities, and obtain the benefit of the exemption under section 327 of the Act from the general prohibition.
(3) In contrast, non-mainstream regulated activities are particular regulated activities carried on by an authorised professional firm. If the professional firm were not authorised under the Act, these same activities would be exempt regulated activities which, if the firm could meet the necessary conditions in section 327, would enable it to benefit from the section 327 exemption.
(4) Therefore, a number of provisions of the Handbook (see PROF 5.3) have been disapplied or modified in respect of these non-mainstream regulated activities of authorised professional firms.

01/12/2001

PROF 5.1.4

A "non-mainstream regulated activity" is defined in the Glossary as "a regulated activity of an authorised professional firm in relation to which the conditions in PROF 5.2.1 R are satisfied". Conditions (1) to (5) of PROF 5.2.1 R replicate section 327(1)(b)(i), (3), (4), (5) and (6) of the Act, as if those conditions applied to an authorised professional firm.

01/12/2001

PROF 5.2

Nature of non-mainstream regulated activities

01/12/2004

Conditions for non-mainstream regulated activity

PROF 5.2.1

A "non-mainstream regulated activity" is a regulated activity of an authorised professional firm in relation to which the following conditions are satisfied:

(1) the firm must not receive from a person other than his client any pecuniary reward or other advantage, for which he does not account to his client, arising out of the carrying on of the regulated activity;
(2) the manner of the provision by the firm of any service in the course of carrying on the regulated activity must be incidental to the provision by it of professional services (see PROF 5.2.2 R);
(3) the regulated activity must not be of a description, or relate to an investment of a description, specified in The Financial Services and Markets Act 2000 (Professions) (Non-Exempt Activities) Order 2001 (SI 2001/1227) or in any other order made by the Treasury under section 327(6) of the Act (see PROF 2 Annex 2 GG);
(4) there must not be in force any direction under section 328 of the Act (Directions in relation to the general prohibition) in relation to:

(a) a class of person which would have included the firm were it not an authorised person; or
(b) a description of regulated activity which includes the regulated activity the firm proposes to carry on; and

(5) the regulated activity must be an activity which exempt professional firms which are members of the same designated professional body as the authorised professional firm are permitted to carry on under rules made by that body as required by section 332(3) of the Act.

20/09/2001

PROF 5.2.2

In PROF 5.2.1 R (2), "professional services" means services:

(1) which do not constitute a regulated activity; and
(2) the provision of which is supervised and regulated by a designated professional body.

01/12/2001

PROF 5.3

Reference to other sourcebooks and manuals

01/12/2004

Introduction

PROF 5.3.1

The parts of the Handbook in which provisions are disapplied or modified in relation to authorised professional firms when carrying on non-mainstream regulated activities include those described in PROF 5.3.1A G to PROF 5.3.9 G

31/10/2004

General provisions

PROF 5.3.1A

4.3.5 R provides that 4.3.1 R (Disclosure in letters to private customers) does not apply to an authorised professional firm with respect to its non-mainstream regulated activities.

01/03/2003

Conduct of business sourcebook

PROF 5.3.2

COB 1.2.1 R (4) provides that COB does not apply to an authorised professional firm with respect to its non-mainstream regulated activities, except for:

(1) COB 2.1 (Clear, fair and not misleading communication), COB 3 (Financial promotion) and COB 4.2.1 R to COB 4.2.6 G, COB 4.2.9 R and COB 4.2.11 E (Content of terms of business); and
(2) (where these are insurance mediation activities) the IMD implementation provisions and COB 4.3.19 R to COB 4.3.25 R as if they also applied to a firm carrying out the activities in COB 4.3.19R (1)(a)-(c) with or on behalf of private customers, unless:

(a) the designated professional body of the firm has made rules which implement some or all of articles 12 and 13 of the IMD;
(b) those rules have been approved by the FSA under section 332(5) of the Act; and
(c) the firm is subject to the rules in the form in which they were approved;

in which case they are disapplied to the extent that articles 12 and 13 of the IMD are implemented by the rules of the designated professional body.
(3) COB 1.2.1A G provides that the effect of COB 1.2.1 R (4)(d) is that if the relevant designated professional body of an authorised professional firm does not make rules implementing articles 12 and 13 of the IMD applicable to authorised professional firms, those firms will need to comply with the IMD implementation provisions and COB 4.3.19 R to COB 4.3.25 R as if they also applied to a firm carrying out the activities in COB 4.3.19 (1)(a)-(c) with or on behalf of private customers.

01/12/2004

Training and Competence sourcebook

PROF 5.3.3

TC 2.1.1 R (2) provides that TC 2, which imposes the substantive training and competence requirements, does not apply to an authorised professional firm with respect to its non-mainstream regulated activities.

20/09/2001

PROF 5.3.4

SYSC 3.2.6A R to SYSC 3.2.6J G and SYSC 6.3 (Financial crime), in relation to money laundering, do not apply to authorised professional firms when carrying on non-mainstream regulated activities.

01/01/2007

Supervision manual

PROF 5.3.5

SUP 10.1.18 R provides that SUP 10 (Approved persons) does not apply (except in respect of the required functions) to an authorised professional firm in respect of its non-mainstream regulated activities. So a person such as a partner, whose only regulated activities are incidental to his professional services, in an authorised professional firm whose principal purpose is to carry on activities other than regulated activities, need not be an approved person.

01/12/2001

Dispute resolution: Complaints sourcebook

PROF 5.3.6

DISP 1.1.1 R (1)(c) provides that DISP 1 (Complaint handling procedures for firms) does not apply to an authorised professional firm in so far as its non-mainstream regulated activities are concerned. DISP 2.6.7 R further provides that a complaint about an authorised professional firm cannot be handled under the Compulsory Jurisdiction of the Financial Ombudsman Service if it relates solely to non-mainstream regulated activity and can be handled by a designated professional body. This is because such a complaint will be handled by the relevant professional body.

20/09/2001

Market Conduct sourcebook

PROF 5.3.7

MAR 4.4.1 R (3) provides that MAR 4, which deals with the endorsement of the City Code on Takeovers and Mergers and the Rules Governing Substantial Acquisitions of Shares, does not have effect in relation to an authorised professional firm in respect of non-mainstream regulated activity.

20/09/2001

Mortgages: Conduct of business sourcebook

PROF 5.3.8

MCOB 1.2.4 G provides that MCOB does not apply to an authorised professional firm with respect to its non-mainstream regulated activities except for MCOB 2.2 (Clear, fair and not misleading communication), MCOB 3 (Financial promotion) and to a limited extent MCOB 4.4 (Initial disclosure requirements).

31/10/2004

PROF 5.3.9

CASS 1.2.4 R provides that CASS 2, CASS 3 and CASS 4 do not apply to authorised professional firms when carrying on non-mainstream regulated activities. CASS 1.2.5 R further provides that if the non-mainstream regulated activities are insurance mediation activity, CASS 5 does not apply to an authorised professional firm, if the firm's designated professional body has rules applicable to the firm which implement the IMD and which are in the form approved by the FSA under section 332(5) of the Act.

14/01/2005

Insurance: Conduct of Business sourcebook

PROF 5.3.10

(1) ICOB 1.2.10 R provides that ICOB does not apply to an authorised professional firm with respect to its non-mainstream regulated activities, except for:

(a) ICOB 2.2 (Clear, fair and not misleading communication);
(b) ICOB 3 (Financial promotion);
(c) ICOB 4.2.2 R in relation to the information for customers in table ICOB 4.2.8 R items numbered (8), (9) and Note 4 covering complaints and compensation; and
(d) those sections in ICOB which implement articles 12 and 13 of the IMD, unless:

(i) the designated professional body of the firm has made rules which implement articles of the IMD;
(ii) those rules have been approved by the FSA under section 332(5) of the Act; and
(iii) the firm is subject to the rules in the form in which they were approved.

(2) ICOB 1.2.11 G (2) provides that the effect of ICOB 1.2.10 R (4) is that if the relevant designated professional body of an authorised professional firm does not make rules implementing articles 12 and 13 of the IMD applicable to authorised professional firms those authorised professional firms will need to comply with those sections of ICOB which implement articles 12 and 13 of the IMD, namely ICOB 4.1 to ICOB 4.4 (but not ICOB 4.2.20 R to 4.2.28G), and ICOB 4.8.

01/12/2001

PROF 5.4

Application of the Distance Marketing Regulations

01/12/2004

PROF 5.4.1

(1) In addition to those provisions of the Distance Marketing Regulations which apply directly (see COB 1.9.2 G (3)), an authorised professional firm must, with respect to its non-mainstream regulated activities, comply with regulations 7 to 11 and 15 of the Distance Marketing Regulations. Those regulations have effect to cancel distance contracts the making or performance of which by such firms constitutes a non-mainstream regulated activity.
(2) Paragraph (1) does not apply in relation to regulations 7 to 8 and 15 if the designated professional body of the authorised professional firm has rules equivalent to some or all of those regulations and:

(a) those rules have been approved by the FSA under section 332(5) of the Act; and
(b) the authorised professional firm is subject to those rules in the form in which they have been approved;

in which case those regulations are disapplied to the extent that they are implemented by the rules of the designated professional body.

14/01/2005

PROF 5.4.2

The effect of PROF 5.4.1 R is that it allows designated professional bodies to make rules which allow an authorised professional firm to comply with the Distance Marketing Regulations in respect of its non-mainstream regulated activities in the same way as an exempt professional firm which is a member of the same designated professional body in respect of its exempt regulated activities.

09/10/2004

PROF 6

Fees

PROF 6.1

[deleted: the provisions in relation to designated professional bodies are set out in FEES 1, 2, 3 and 4]

01/01/2006

PROF 6.2

[deleted: the provisions in relation to designated professional bodies are set out in FEES 1, 2, 3 and 4]

01/01/2006

PROF 6.3

[deleted: the provisions in relation to designated professional bodies are set out in FEES 1, 2, 3 and 4]

01/01/2006

PROF 6 Annex 1

[deleted: the provisions in relation to designated professional bodies are set out in FEES 1, 2, 3 and 4]

01/01/2006

PROF 7

Insurance mediation activity

PROF 7.1

Register of persons carrying on insurance mediation activity

14/01/2005

Background

PROF 7.1.1

The Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) (No. 2) Order 2003 (SI 2003/1476) implements in part the provisions of the IMD and amends the Regulated Activities Order.

14/01/2005

The FSA's obligation to maintain a record

PROF 7.1.2

Article 93 of the amended Regulated Activities Order requires the FSA to maintain an up-to-date record of every unauthorised person, whether an appointed representative or an exempt professional firm that carries on, or is proposing to carry on, insurance mediation activity and to whom the general prohibition does not apply in relation to the carrying on of such an activity. In relation to exempt professional firms the general prohibition does not apply by virtue of section 327 of the Act.

14/01/2005

PROF 7.1.3

The FSA is not to include an exempt professional firm in the register relating to unauthorised persons if:

(1) under a direction given by the FSA under section 328(1) of the Act, section 327(1) of the Act does not apply in relation to the carrying on by it of insurance mediation activity; or
(2) the FSA has made an order under section 329(2) of the Act disapplying section 327(1) of the Act in relation to the carrying on by the exempt professional firm of insurance mediation activity.

14/01/2005

Provision of information to the FSA

PROF 7.1.4

Article 94 of the Regulated Activities Order obliges a designated professional body to provide the FSA with the information it needs to maintain the record referred to in PROF 7.1.2 G of every unauthorised person that carries on, or proposes to carry on, insurance mediation activity and keep it up to date. This information needs to include the details referred to in PROF 7.1.7 G. This is the responsibility of the designated professional body and not each exempt professional firm.

14/01/2005

Financial Services sand Markets Act 2000 (Professions) (Non-Exempt) Activities Order 2001 (SI 2001/1227)

PROF 7.1.5

(1) The attention of exempt professional firms is drawn to the significance of The Financial Services and Markets Act 2000 (Professions) (Non-Exempt) Activities Order 2001 (SI 2001/1227), as amended by The Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) (No.2) Order 2003 (SI 2003/1476). The effect of these amendments is that exempt professional firms may not carry on certain regulated activities which relate to a contract of insurance in reliance on the Part XX exemption unless the exempt professional firm is included in the record of unauthorised persons carrying on insurance mediation activity maintained by the FSA under article 93 of the Regulated Activities Order.
(2) Each exempt professional firm carrying on, or proposing to carry on, insurance mediation activity should ensure that at all material times the name of the firm and the requisite details are included in the record maintained by the FSA. Any such exempt professional firm carrying on, or proposing to carry on, insurance mediation activity whose name does not appear in the record maintained by the FSA is likely to be breaching the general prohibition which is a criminal offence under section 23 of the Act.

14/01/2005

FSA Register

PROF 7.1.6

In order to comply with its obligations to maintain a record of unauthorised persons that carry on, or are proposing to carry on, insurance mediation activity, the FSA has established an appropriate record which forms part of the record maintained by the FSA under section 347 of the Act. The record maintained by the FSA under section 347 of the Act is known as the FSA Register. The FSA Register therefore contains a record of each authorised and unauthorised person that carries on, or proposes to carry on, insurance mediation activity.

14/01/2005

PROF 7.1.7

The information to be included on the record in relation to exempt professional firms will, as required by the IMD, include details of:

(1) the name and address of each exempt professional firm that carries on, or is proposing to carry on, insurance mediation activity;
(2) where the exempt professional firm is not an individual, the names of the individuals within the management of the exempt professional firm who are responsible for the insurance mediation activity; and
(3) each EEA State in which the exempt professional firm under an EEA right derived from the IMD:

(a) has established a branch; or
(b) is providing cross border services.

14/01/2005

FSA Website

PROF 7.1.8

The FSA Register can be accessed through the FSA website under the link www.fsa.gov.uk/register.

14/01/2005

PROF 7.2

Passporting under the Insurance Mediation Directive

14/01/2005

PROF 7.2.1

All persons that are on the register maintained by the FSA in accordance with article 3 of the IMD, and so permitted to conduct insurance mediation activity, are entitled to exercise the EEA right conferred upon them by article 6 of the IMD to establish a branch or provide services relating to insurance mediation activity in another EEA State. Both authorised professional firms and exempt professional firms that are so registered by the FSA get the benefit of these passporting rights.

14/01/2005

PROF 7.2.2

Any authorised professional firm or exempt professional firm that is contemplating the exercise of rights under article 6 of the IMD to establish a branch or provide services relating to insurance mediation activity in another EEA State is referred to SUP 13 (Exercise of passport rights by UK firms) for further details as to the applicable process. Note that both authorised professional firms and exempt professional firms are UK firms for the purposes of the Handbook, including SUP 13.

14/01/2005

PROF 7.2.3

A UK firm proposing to establish a branch in another EEA State for the first time under an EEA right derived from the IMD must first satisfy the conditions in paragraphs 19(2),(4) and (5) of Part III of Schedule 3 to the Act (EEA Passport Rights). These include the requirement that the firm must at the outset give the FSA a notice in the required form of its intention to establish the branch. SUP 13.3.2 G to SUP 13.3.5 G detail the procedure to be followed once such a notice of intention has been received by the FSA. SUP 13.5.1 R (Specified contents: notice of intention to establish a branch) and SUP 13.6.9A G (Firms passporting under the IMD) will also be relevant.

06/02/2007

PROF 7.2.4

A UK firm proposing to provide cross border services into another EEA State for the first time under an EEA right derived from the IMD must first satisfy the conditions in paragraph 20(1) of Part III of Schedule 3 to the Act (EEA Passport Rights). The UK firm must at the outset give the FSA a notice in the required form of its intention to provide the cross border services into another EEA State. In this instance, the relevant procedure to be followed is outlined in SUP 13.4.2 G to SUP 13.4.5 G. SUP 13.5.2 R (Specified contents: notice of intention to provide cross border services) and SUP 13.7.11 G will also be relevant.

14/01/2005

Transitional Provisions and Schedules

PROF TP 1

Transitional provisions

PROF TP 1.1

(1)

(2) Material to which the transitional provision applies

(3)

(4) Transitional provision

(5) Transitional provision: dates in force

(6) Handbook provision: coming into force

1

PROF 4.1.2 R

G

The FSA considers that the issue by an exempt professional firm of a letter to a client on a letterhead that includes a statement that it is "authorised" will be in breach of PROF 4.1.2 R. This includes a statement such as: 'This firm is authorised in the conduct of investment business by [name of recognised professional body] under the Financial Services Act 1986.' However, an exempt professional firm which has been authorised for investment business by a recognised professional body under the Financial Services Act 1986 may continue to use stocks of notepaper and other material that discloses its status under that act, provided that it strikes through the disclosure statement.

From commencement

Commencement

2

PROF

G

General transitional provisions
GEN contains some technical transitional provisions that apply throughout the Handbook and which are designed to ensure a smooth transition at commencement.

From commencement

Commencement

01/12/2004

PROF Sch 1

Record keeping requirements

01/12/2004

PROF Sch 1.1

There are no record keeping requirements in PROF.

01/12/2004

PROF Sch 2

Notification requirements

01/12/2004

PROF Sch 2.1

There are no notification or reporting requirements in PROF.

01/12/2004

PROF Sch 3

Fees and other required payments

01/12/2004

PROF Sch 3.1

There are no requirements for fees or other payments in PROF.

01/12/2004

PROF Sch 4

Powers exercised

01/12/2004

PROF Sch 4.1

The following powers and related provisions in the Act have been exercised by the FSA to make the rules in PROF:

Section 138 (General rule-making power)

Section 156 (General supplementary powers)

Section 332(1) (Rules in relation to persons to whom the general prohibition does not apply)

01/12/2004

PROF Sch 4.2

The following powers in the Act have been exercised by the FSA to give the guidance in PROF:

Section 157(1) (Guidance)

01/12/2004

PROF Sch 5

Rights of action for damages

01/12/2004

PROF Sch 5.1

The table below sets out the rules in PROF contravention of which by an authorised person may be actionable under section 150 of the Act (Actions for damages) by a person who suffers loss as a result of the contravention.

01/12/2004

PROF Sch 5.2

If a "YES" appears in the column headed "For private person?", the rule may be actionable by a "private person" under section 150 (or, in certain circumstances, his fiduciary or representative; see article 6(2) and (3)(c) of the Financial Services and Markets Act 2000 (Rights of Action) Regulations 2001 (SI 2001 No. 2256)). A "Yes" in the column headed "Removed" indicates that the FSA has removed the right of action under section 150(2) of the Act. If so, a reference to the rule in which it is removed is also given.

01/12/2004

PROF Sch 5.3

The column headed "For other person?" indicates whether the rule may be actionable by a person other than a private person (or his fiduciary or representative) under article 6(2) and (3) of those Regulations. If so, an indication of the type of person by whom the rule may be actionable is given.

01/12/2004

PROF Sch 5.4

Right of action under section 150

Chapter/Appendix

Section/Annex

Paragraph

For private person?

Removed?

For other person?

PROF 5.2.1 R Conditions for non-mainstream regulated activity

Yes

No

01/12/2004

PROF Sch 6

Rules that can be waived

01/12/2004

PROF Sch 6.1

No rules in PROF can be waived by the FSA under section 148 of the Act (Modification or waiver of rules), except for PROF 5.2.1 R and PROF 5.2.2 R (Conditions for non-mainstream regulated activity).

01/12/2004