Financial services regulations – something for all businesses to consider - Kuits Solicitors Manchester
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Financial services regulations – something for all businesses to consider

Financial services regulations – something for all businesses to consider

21st April 2022 - Published by Kuits Corporate Team

Financial services regulations are often overlooked by businesses, perhaps owing to their complexity but also due to a general lack of awareness of how they might apply to different types of company. It is important to understand that these regulations are not just limited to companies that are authorised by either the Financial Conduct Authority (FCA) and/or the Prudential Regulation Authority (PRA). For example, an unauthorised start-up business looking to raise capital through equity finance should be mindful of:

  • the restrictions on financial promotion;
  • breaching the regulatory perimeter;
  • and the prospectus requirements.

Whilst banks and investment firms have vast resources to effectively manage their regulatory risk, it is more challenging for smaller firms with limited resources to navigate through the wealth of financial services regulation.

Kuits recently appointed Amelia Garman, a financial services regulatory solicitor to their Corporate team. Alongside, Partner, Jan Winstanley, Amelia and the team will be working with clients across multiple sectors to ensure that they understand their financial services regulatory exposure and that these risks are managed accordingly.

What do unauthorised companies need to know?

Unauthorised companies must be aware of the general prohibition and financial promotion rules (sections 19 & 21 of Financial Services and Markets Act 2000 (FSMA)).

General prohibition

General prohibition prohibits a person from carrying out a regulated activity in the UK or purport to do so unless he is an authorised person; or an exempt person.

Financial promotion rules

The financial promotion rules restrict a person, in the course of business, from communicating a financial promotion to engage in investment activity unless:

  • a person is authorised;
  • the content of the communication is approved by an authorised person;
  • or an exemption applies.

It is easy to unintentionally fall in scope of either or both rules and understanding how the rules impact a business require close analysis of both the rules and the business’s situation. The team at Kuits are able to assist with this.

Kuits already receive instructions from unauthorised clients who wish to know whether certain exemptions to the financial promotion rules are available and whether this will allow them to communicate a financial promotion. Whilst no two circumstances are ever the same, the client’s desire to be compliant should be unchanging. Reputational damage, large fines and criminal liability for breaches of certain rules are effective deterrents for any business.

If you would like to discuss this or anything else in connection with financial services regulation, please do not hesitate to contact Amelia Garman on 0161 832 3434 or at ameliagarman@kuits.com

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