Trading names: no free pass to regulated activities
Think you can conduct regulated activities just because your trading name is on the FCA Register? Think again.
FCA have published new guidance on the use of trading names. But this is not new; it is a topic I came across when I was at the regulator years ago. The FCA has published one variation or another of the webpage below for decades to try and get this message across.
I have spoken to individuals who have been convinced that as their company name they trade under appears on the FCA Register, they can legitimately conduct regulated activities. And I still get the odd question from firms/individuals looking to shortcut the FCA gateway. It has led to some enlightening conversations on both sides...
As Principal firms change their strategies (potentially bringing former Appointed Representatives ‘in-house’ and adding a trading style to reflect the new business/fund) and the FCA gets stricter with Principals/authorisation, I can see this becoming an issue.
The UK regulatory perimeter is complicated. We are not lawyers, but we can help guide you through it (and refer you to some expert lawyers if needed).
We would stress to anyone who has been informed their trading name is now added and they are free to act…do ask some more questions/get clarification of what you are relying on to avoid prosecution under the Act.
The perimeter is not simple, but your regulatory status (authorised/registered exempt and such) should be…(generally).
If you are providing investment services and/or conducting regulatory activities on a regular basis, you either need to be exempt or authorised or possibly registered (or rely on the various exclusions - not a quick win in many cases).
An Appointed Representative (AR) is exempt – because they have a contract in place with an authorised firm who takes responsibility for their actions. The AR is added to the FCA Register by the Principal firm, who will be subject to a multitude of requirements including ensuring there is a contract in place. An AR is not created just by adding a trading name.
To put it another way, if I start calling myself Maradona, Seve Ballesteros or Taylor Swift I still neither have an ounce of their talent, connections or access to their bank accounts. In the same way, a trading name gives you no protection from the Financial Services and Markets Act in and of itself. And the penalty for conducting regulated activities without being authorised, registered or exempt? Just a few years in jail and/or a fine…
If you would like to conduct financial services, or think you might need to be regulated, we’re happy to have a (free) initial chat to see if we can help you.