The Financial Services and Markets Act 2000 (‘the Act’) created the Financial Services Authority, now the FCA, which is tasked with the regulation of the banking, investment and insurance markets.
Although the Act has been considerably modified by subsequent legislation, there are criminal offences which it created that are still applicable and John Veale of Kangs Solicitors comments upon them.
Section 19 | General Prohibition
This section created the ‘general prohibition’, namely,:
- No person may carry on a regulated activity in the United Kingdom, or purport to do so unless he is –
A) an authorised person or
B) an exempt person.
- a regulated activity is an activity which is carried on by way of business and relating to an investment of a specified kind or property of any kind.
- an authorised person is someone who has permission granted by the FCA to carry on one or more regulated activities.
- an exempted person is one specified by the Treasury who is not subject to the general prohibition or can carry out certain named regulated activities/functions that would normally be subject to the general prohibition.
Section 21 | Restrictions on Financial Promotion
- A person must not, in the course of business, communicate an invitation or inducement to engage in investment activity unless –
A) they are an authorised person, or
B) the content of the communication has been approved by an authorised person.
Section 23 | Contravention of the General Prohibition
- A person who contravenes the general prohibition is guilty of an offence.
Section 24 | False Claims to be Authorised or Exempt
- A person who is neither an authorised person nor, in relation to the regulated activity in question, an exempt person is guilty of an offence if he –
- describes himself as an authorised person
- describes himself as an exempt person in relation to a regulated activity or
- behaves, or otherwise holds himself in a manner which indicates that he is authorized or exempt.
- It is a defence to a section 21 offence if the accused believed on reasonable grounds that the content of a communication was prepared or approved by an authorised person.
- It is a defence to both section 21 and 23 offences if the accused can show that he took all reasonable precautions and exercised all due diligence to avoid committing the offence.
- For section 21 and 23 offences the penalty on summary conviction is imprisonment for a maximum of six months, a fine not exceeding the statutory maximum or both and for conviction on indictment, imprisonment not exceeding two years, a fine or both.
- Section 24 offences are summary only for which if convicted there is a penalty of imprisonment not exceeding six months, a fine not exceeding level 5 on the standard scale or both.
- Where a section 24 offence involved or included the public display of any material, the maximum fine for the offence is a level 5 fine multiplied by the number of days that the material remained on display.
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