Regulated Activities and Authorisation in the UK Essay Example

contracts, and regulated mortgage contracts. It is important to note that the Bank of England does not engage in supervision of individual institutions.

Therefore, the FSA is also responsible for supervising the financial activities of certain individual institutions. Currently, the FSA manages the tasks that were previously done by up to 10 regulatory bodies, resulting in almost 10,000 companies being directly regulated by it. As a result, the powers and scope of the FSA are extensive. According to the main provision of the Financial Services and Markets Act (FSMA), any activities mentioned in the Regulatory Activities Order (RAO) and the Perimeter Guidance Manual (PERG) are considered regulated activities. Therefore, a business must obtain authorization to carry out such activities. However, open-ended investment companies, UCITS operators, and companies with an EEA passport do not require authorization from the FSA.

Although Treaty firms are authorized by their home state, they must notify the FSA appropriately. Additionally, a company can acquire authorization by obtaining permission from the FSA under Part IV of the FSMA. This permission is not the ultimate goal, but rather, it represents the main path for a company to gain authorization for conducting business. In order to obtain this permission, a company must meet specific threshold conditions determined by the FSA and fulfill the required authorization fees.

Once a company meets these conditions, it will automatically gain authorization. The breach of permission is seen as a disciplinary offense, but the agreement will remain enforceable. When a business wants to add or remove a specific permission needed for a regulated activity, most of the necessary details are already available to the FSA, making the decision process faster and easier.

However, removing a permission does not result in the cancellation of authorization. Breaching authorization is considered a civil offense, which makes agreements unenforceable and results in FSA sanctions.

The COND section of the FSA handbook specifies the threshold conditions, which depend on factors such as the company's legitimacy, office location, available resources, and nature of business. The company must be a corporate body and have appropriate insurance. It must also be a registered member of a friendly society or a Lloyd's member. The company's head quarters and registered offices must be located within the United Kingdom. If the head office is not in the UK, then at least the business operations must be conducted there. Additionally, the company's close links should not prevent or disrupt FSA regulation.

The company must possess sufficient financial and non-financial resources to conduct regulated activities and withstand competition from rivals. However, the FSA has the discretion to modify or revoke the permission granted. Cancellation of permission typically occurs due to violation of threshold conditions. Conversely, the permission may be adjusted based on the specific regulated activities undertaken by the company. The FSA can impose limitations on a company depending on its investment type and client base. Furthermore, it can enforce its own restrictions based on the nature of the firm's business operations. These threshold conditions ensure compliance with regulatory policies, including maintaining market confidence, protecting consumer interests, and reducing financial crimes.