CHAPTER ONE – INTRODUCTION
Interpreting UK financial services legislation can be a frustrating task. The drafting can sometimes be unclear, while the relevant sections are not always immediately obvious. This is due to many years of amendments to the law, largely linked to the implementation of European legislation which has in many cases been imposed on top of the UK’s existing regulatory framework. Policy and political changes (in particular, Brexit), have also led to further amendments. The result is a network of regulation that to the uninitiated can be daunting to review.
The FCA’s perimeter guidance manual (which I shall refer to throughout this book as PERG) is one of regulatory lawyers’ favourite sectors of the FCA Handbook. It is written in a (relatively) clear and simple way and gives clarity to some of the more confusing elements of the regulatory framework. It is a great companion to those who are looking to understand what sits within the FCA’s regulatory remit, as the boundary as to what is caught is not always clear cut.
The purpose of this guide is to give the reader some additional pointers on navigating PERG. The guide aims to point to the most useful sections and also to highlight interesting or quirky points. Sometimes it is not clear that certain sections of PERG may be useful to your analysis and I will also point these out.
A point on scoping
This guide will focus on areas of common interest rather than specialist sub-categories such as regulated lending (which is an area which could do with its own “practical guide”!).
The purpose of this guide is to focus on the key regulated activities, those ordinarily understood to be “investment business”, as well as giving an overview of the regulatory framework that applies.
For the avoidance of doubt, this guide will not cover the following in detail;
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- Insurance and insurance distribution;
- Debt adjusting type activities;
- Consumer credit and home finance activities;
- Activities relating to investment funds such as the activities relating to operating collective investment schemes and managing alternative investment funds;
- Electronic money and payment services.
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The intention of this guide is to focus on regulated activities. Of course, one of the other key regimes in relation to the UK financial services framework is the financial promotion regime. Please see the defined term “Financial Promotion” for more information.
A note on MiFID
When the UK was part of Europe, European financial services legislation needed to be reflected in our regime. It was generally considered that the UK position “gold plated” the European regime, so instead of replacing the UK framework, European legislation was somewhat laid on top of it. This is very much the case with MiFID, which is the European legislation that applies to investment firms.
This guide will not consider MiFID in detail, however it will make reference to MiFID when it is specifically relevant, for example in relation to overrides. Other European regimes such as the Alternative Investment Fund Managers Directive are outside scope of this guide.
I hope that you find PERG as helpful as I do in interpreting the trickier areas of the web of UK financial services legislation and that this guide aids in your navigation of PERG.
Of course, do not take as conclusive or rely on any of the information set out in this guide; it gives some views on interpretation based on experience, but you must make your own assessment and draw your own conclusions. Any views expressed are my own and do not represent the views of the FCA.
The law described in this book is believed to be accurate at 30th July 2025. As financial services legislation changes regularly, it is advisable to check the up-to-date regulatory material.
CHAPTER TWO – DEFINED TERMS
It is often said about financial services lawyers that we love acronyms. When we present to or even communicate with other lawyers we are known to speak a language unique to FS Reg lawyers: COBS, OEICs, AIFs…. The list goes on!
To assist with interpretation of FS jargon, I have set out below some of the defined terms / acronyms that will be used throughout this guide for your reference:
AIF: means an alternative investment fund;
Business Order: means the FSMA (Carrying on Regulated Activities by Way of Business) Order 2001;
CIS: means the FSMA (Collective Investment Schemes Order) 2001;
CIS Order: means Financial Services and Markets Act 2000 (Collective Investment Schemes Order) 2001;
Contractually based investments: means in accordance with Article 3(1) of the RAO, options, futures, contracts for differences (and rights to or interests in these types of investments). There are also other types of contracts that fall within this definition that are not the subject of this guide;
FCA: means the Financial Conduct Authority, or any successor entity;
Financial Promotion: means an invitation or inducement communicated in the course of business to engage in investment activity. It is a criminal offence pursuant to Section 21 of FSMA to make a Financial Promotion without being authorised under FSMA, unless a relevant exemption applies (the Financial Promotion Restriction). The exemptions applying are set out in the FPO;
FPO: means the FSMA (Financial Promotion) Order 2005;
FSMA: means the Financial Services and Markets Act 2000;
General Prohibition: means the restriction on carrying on of regulated activities set out in Section 19 of FSMA;
Investment Services: means the list of investment services under MiFID (Section A of Annex 1 of MiFID now onshored in Part 3 of Schedule 2 of the RAO);
MiFID: means Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments;
MiFID investment firm: a firm to which MiFID would apply if it had its head office or registered office in the EEA. This includes investment firms (persons whose regular occupation or business is the provision of one or more Investment Services to third parties and/or the performance of these on a professional basis) with their head offices in the UK;
OEIC: means open-ended investment company;
PERG: means the FCA’s perimeter guidance manual;
RAO: means the FSMA (Regulated Activities Order) 2001;
Securities: means the investments listed out at Article 3(1) of the RAO, and includes investments like shares, debentures, warrants, units in funds etc;
UCITS: means undertakings for collective investment in transferable securities (a type of retail fund).
You should also be aware that there is a comprehensive Glossary as part of the FCA Handbook where you can look up any financial services term and be able to find its definition.