Daniel Moore, Richard Ellis and Jack Sears write for New Law Journal on navigating financial services regulation in the UK: a guide for insolvency practitioners
min readIn an article for New Law Journal, Daniel Moore (Partner), Richard Ellis (Partner) and Jack Sears (Associate) guide insolvency practitioners (IPs) through the UK financial services regulatory framework.
The article focuses on IPs’ interaction with the Financial Services and Markets Act 2000, the general prohibition, and various related statutory instruments. It also addresses the potential risks to IPs of non-compliance, and the scope and boundaries of the exclusions available to them.
FSMA and the Regulated Activities Order 2001 (RAO) govern regulated activities in the UK. The Financial Promotion Order 2005 (FPO) restricts unauthorised financial promotions unless approved or exempted. The General Prohibition under FSMA criminalises conducting regulated activities without authorisation, with breaches leading to severe penalties enforced by the Financial Conduct Authority (FCA).
IPs may encounter regulated activities when handling financial products or managing FCA-regulated entities. The RAO provides specific exclusions, notably article 72H, allowing IPs to perform certain activities without FCA authorisation, provided they act within their statutory roles as defined by the Insolvency Act 1986. However, these exclusions are not blanket permissions, as clarified by the case Promethean Finance Limited v The Financial Conduct Authority [2024].
When appointed over FCA-regulated firms, IPs must notify the FCA or PRA, manage client assets per the Client Assets Sourcebook (CASS), and ensure ongoing compliance with FCA rules and conduct standards. The article urges IPs to carefully assess their actions to ensure compliance and seek legal advice when uncertain.
Understanding the nuanced boundaries between regulated and non-regulated activities is crucial for IPs to fulfil their duties effectively while adhering to legal requirements.
Read the full piece in New Law Journal here.
