Graham Colley
Solicitor
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Graham Colley Solicitor
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Explanation of Financial Services Regulation Law Society / FSA Whilst I am a solicitor, I am also qualified as an Independent Financial Adviser. All work undertaken by me that requires authorisation by the Financial Services Authority (“FSA") is regulated by the FSA. As a solicitor regulated by the Law Society I can give generic advice e.g. ·
advising on
the differences between an endowment mortgage, a pension mortgage and a straight repayment
mortgage. ·
advice
relating to investments generally or to a class of investments. ·
discussing
the various options available without referring to particular investments.
I can arrange a transaction on
behalf of a client with or through an independent financial adviser. I /we understand that
if I use the firm with whom you are an independent financial adviser, you are regulated by
the FSA, and has a different terms of business, complaints and compensation procedure. Any financial work which involves transactions which involve advising in the transfer acquisition or purchase of investment, insurances or mortgages will not be undertaken by me as a solicitor. However, my practice may undertake the following work, which it may reasonably be regarded as a necessary part of the professional service of a solicitor. A. Conveyancing Work I can advise on the disposal
of life policies NB. Surrendering the policy is rarely the best way of realising the
full value of the policy I
can arrange the disposal of a life policy I
cannot recommend that you to
buy a life policy but you can:
I
can advise on and/or arrange the acquisition or disposal by way of an
assignment, of a life policy. Where a pension mortgage is linked
to a personal pension scheme I cannot
recommend a client to buy or sell rights or interests in the personal pension scheme
but I can:
I can safeguard and administer policies linked with mortgages in connection with a conveyancing transaction, although in most cases you will only be safeguarding such policies and so will not be carrying on a regulated activity. Management or Service CompaniesI can deal
as agent, advise on and/or arrange the purchase of shares in a management or service
company. I can
safeguard and administer shares in connection with a conveyancing transaction, although in
most cases I will only be safeguarding such shares and so will not be carrying on a regulated
activity B - Corporate Work
Shares, debentures and other
securities are
investments. Pension policies and life policies are investments, they fall within
the definition of contractually based investments. Sale of a body corporate I can deal as agent, arrange deals
in investments or advise on investments where the dealing, arranging or advice
relates to a transaction which involves the sale of a body corporate provided that certain conditions in the exclusion are met (FSA Perimeter
Guidance (Section 1.20.9G – 1.20.14G). The conditions basically require that the
object of the sale/purchase must be the acquisition of the day-to-day control of the
affairs of the company I can deal as agent, make
arrangements, safeguard and administer or give advice where it may reasonably be
regarded as a necessary part of other professional services. This exclusion is also
subject to the condition that there is no separate remuneration for carrying on the
activities in question. I can advise on and/or arrange
the sale of a client’s shares etc in
a public or private company However if you are a "lay"
individual in his or her personal capacity or an individual acting in the course of a
business the rules naturally are more
restrictive. I cannot, as an unauthorised
solicitor , advise you relation to the purchase of shares in listed companies or in
response to public offers Accordingly I cannot recommend that you buy shares etc ,but I can:
Key man insurance/life policies I can advise on the disposal of
life policies but you must ensure that you are competent to do so and must consider all
possible means of disposal. For example, selling on the second-hand policy market,
conversion of joint life policies to single life, assignment, making policies paid up or
surrendering the policy. NB. Surrendering the policy is rarely the best way of
realising the full value of the policy. I
can arrange the disposal of a life policy I
cannot recommend a client to buy a life policy but you can:
I cannot recommend a client to
buy or sell rights or interests in a personal pension scheme but I can: o explain the
transaction to the client and give advice on the acquisition of such rights or interests
provided the advice does not consist of a recommendation to enter into the transaction; o give
negative advice, that is, advise the client that the client should not buy such rights or
interests; o obtain
advice from, and/or endorse a recommendation given by, an authorised or exempt person. C. Matrimonial Work Matrimonial
work almost inevitably comes across a wide range of different investments. In some cases
the value of the investments will be high and firms will naturally involve independent
authorised persons in the best interests of their clients. In many cases, however, the
investments may be limited and the choice also limited, sometimes by directions in a Court
Order. In most family situations, clients are not
acquiring investments for the first time. What is involved is a transfer of assets between
the parties in an equitable or agreed way. There is unlikely to be any difficulty in
complying with the condition that any exempt regulated activity must arise out of
or be complementary to another professional service. The areas where solicitors may not
have sufficient competence to advise alone will normally be in relation to the valuation
of a variety of investment products and perhaps the method of disposal Personal pension schemes (rule 5(2)) I
cannot recommend a client to buy or sell rights or interests in a
personal pension scheme but I can:
I
cannot arrange the purchase of rights or interests in a personal
pension scheme except where I can assume on reasonable grounds that the client is not
relying on the firm as to the merits or suitability of the transaction but not
where the transaction involves a pension transfer or an opt out. This only affects
arrangements which would bring about the transaction and would not prevent me from
instructing an authorised person to make the arrangements. I will not as a solicitor arrange the disposal of rights or
interests in a personal pension scheme D - Probate Work I can do much of what is normal in a
probate department without requiring FSA authorisation, (please remember I do not hold
client funds) despite the fact that commonly estates contain a number of investments. In
general there is little problem in complying with the "arising out of or
complementary to" test in probate matters when either acting as or for personal
representatives. However, as the test requires the services to be provided to a particular
client, if the firm were to give advice to a beneficiary, then that would be a separate
retainer and the basic conditions must be applied to that retainer. In these circumstances
I would refer to an Independent financial adviser firm Applying
the broad principles, what distinguishes probate work is that solicitors on the whole are
dealing with the disposal of investments rather than the purchase. However, in large
estates, decisions in relation to the sale of packaged products and in particular,
shares in public companies, will benefit from advice from an authorised person to ensure
that the solicitor is providing a fully competent service. I can deal, arrange, manage, safeguard and administer, send dematerialised instructions and advise, provided that satisfy certain conditions:- a) No additional remuneration For the activities of arranging,
managing, safeguarding and administering and advising, I must not receive remuneration
as a solicitor for carrying on the regulated activities in addition to any
remuneration I may receive for providing the services of a personal representative.
However, I will not be regarded as receiving additional remuneration merely because my remuneration is calculated by reference to time
spent. This means that the fact that I may
charge on a time basis and spend a certain amount of time carrying on a particular regulated
activity would not result in me falling foul of this condition. (See FSA Perimeter
Guidance, 1.20.2G). Where advising this exclusion
is limited to advice given to fellow personal representatives: In addition, for the activities of dealing,
managing and safeguarding and administering, I must not hold myself out as providing such a service as part of my
solicitors practice. I
can deal as agent, make arrangements, safeguard and administer investments
or give advice, where it may reasonably be regarded as a necessary part
of other professional services. For
example, where I advise and arrange for the sale of all assets to pay the debts or
beneficiaries. Whilst I may be able to use this exclusion where all assets are sold, it is
less likely to apply when it requires me to select which assets are to be sold, when it
would be appropriate to seek advice from an authorised person. This exclusion is also
subject to the condition that there is no separate remuneration for carrying on the
activities in question. Where I am a personal representative I can deal as principal, advise on and/or arrange the disposal of all types of investments in the estate in accordance with the terms of the will or intestacy, whether or not there are also lay personal representatives.I can safeguard and administer investments in connection with the winding up of an estate If I am a sole personal representative, , this fact
will potentially mean that the practice is
managing investments in circumstances involving the exercise of discretion. In such
circumstances, I can manage investments
provided that either:
Trust work
In most
cases, if firms are acting as and/or are advising trustees generally on legal and tax
implications arising from the trust and are administering the day to day activities of the
trust, then it is likely that this basic condition will be met. The distinction between
trust and probate work is that firms acting as or for trustees will often be involved in
the purchase of investments as well as the disposal of investments. I will normally have
to take advice when buying particularly where I
am involved in discretionary management. The
exclusions for using an authorised person will be useful in circumstances where the
exclusions for trustees and personal representatives do not apply. Again, to be on the
safe side, consider the broad principle and take appropriate advice even when disposing of
packaged products or shares in public companies. After dealing with the usual
questions, this chapter also looks at the position of nominee, executor and trustee
companies, and at regulated mortgage contracts. For the activities of arranging,
managing, safeguarding and administering and advising, I must not receive remuneration
as a solicitor for providing the regulated activities in addition to any
remuneration I may receive for providing the services of a trustee. In addition, for the activities of dealing,
managing and safeguarding and administering, I must
not hold yourself out as providing such service. I can deal in investments, advise on and/or
arrange the disposal of Shares, debentures, government and public securities etc I cannot recommend a client or a
co-trustee to buy shares etc, but I can:
I can advise on and/or arrange the disposal
of. Unit trusts, shares in open-ended investment companies (OEICS) and shares in
investment trust savings schemes but I will not as a solicitor advise or arrange the
disposal of such rights or interests I cannot recommend a
client to buy arrange the purchase of unit trusts etc. but I can:
Attorneys / ReceiversThere is a special exclusion for
attorneys, in relation to the activity of managing investments - but this requires the use
of an authorised or exempt person. |
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