FSA Handbook

Introduction

Firms carrying out financial services business must either be regulated directly by the Financial Services Authority (FSA) or come within the exemptions for those who are members of certain professional bodies and be regulated by their own regulator. In most cases firms which are solicitors can undertake certain regulated activities free from the requirement to be authorised by the FSA provided that they are licensed under Part XX of the Financial Services and Markets Act 2000 and provided that they undertake only exempt regulated activities provided – for example ones which are an integral part of their professional services.

Firms which fall outside of the Part XX exemption or who choose to undertake work for which an exemption is not given, must be registered with the FSA. Further information on this can be found on the FSA web site and under the Financial Services Authority section on this web site.

The FSA Handbook

Any firm intending to be authorised directly by the FSA will be subject to the provisions set out in the FSA Handbook. Full details can be found on the FSA web site.

The Handbook is made of a number of different provisions and contains all of the FSA?s legislative and other provisions made under powers given to it by the Financial Services and Markets Act 2000. The Handbook, by the FA’s own admission, is an extensive document although in practice most users will only refer regularly to the specific parts of the Handbook relevant to their particular business.

The Handbook is divided into Blocks with each Block being subdivided into modules. These blocks are:

High Level Standards (Block 1)

Block 1 deals with the overarching requirements for all authorised persons (firms) and approved persons. It also contains general interpretative material.

Prudential Standards (Block 2)

Block 2 sets out the prudential requirements that will affect firms.

Business Standards (Block 3)

Block 3 sets out most of the requirements that will affect firms day to day.

Regulatory Processes (Block 4)

Block 4 consists of modules describing the operation of the FSA?s supervisory and disciplinary functions and containing requirements on firms relating to the supervisory function.

Redress (Block 5)

Block 5 contains three modules dealing with the processes for handling complaints and compensation.

Specialist sourcebooks (Block 6)

Block 6 contains specialist modules, which show how the Handbook applies to certain sectors, such as collective investment schemes and credit unions.

Listing, Prospectus and Disclosure Rules (Block 7)

Block 7 contains three modules which set out the requirements for isuers listed on, or seeking admission to, the Official List of the UKLA, rules that apply to a sponsor and a person applying for approval as a sponsor, along with the prospectus and disclosure document requirements.

In addition to the generic handbook, there are also 14 sector-specific tailored handbooks of rules and guidance for smaller firms which are available electronically. These bespoke rulebooks are about 90 per cent smaller than the full Handbook and provide the most relevant information for each industry segment. They cover around 70 per cent of the FSA?s regulated firms, are targeted at smaller firms such as insurance brokers, IFAs and friendly societies. Before relying on a tailored handbook, a firm needs to satisfy itself that it matches the attributes listed for that tailored handbook and if it does not should use the full Handbook.