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
See Notes
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
See Notes
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
See Notes
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
See Notes
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
See Notes
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.
The
FSA
considers that "managed"
here should be read with its natural meaning. However, it may not be sufficient
for a compliance manager to fulfil the role of manager, unless that individual
is also able to exercise significant management functions involving overall
oversight of the operation/business of the relevant person.
- 09/12/2011
PROF 2.1.6
See Notes
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
See Notes
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
See Notes
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
See Notes
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
See Notes
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
See Notes
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
See Notes
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
See Notes
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
See Notes
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
See Notes
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
See Notes
| 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
See Notes
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