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Financial Services Act?
The Financial Services Act 2024 provides a regulatory framework for investment business. Some provisions became effective in 2024, but most provisions and most of the regulatory framework become fully effective in 2024.
A Bill To amend the Bank of England Act 1998, the Financial Services and Markets Act 2000 and the Banking Act 2009; to make other provision about financial services and markets; to make provision about the exercise of certain statutory functions relating to building societies, friendly societies and other mutual societies; to amend section 785 of the Companies Act 2006; to make provision enabling the Director of Savings to provide services to other public bodies; and for connected purposes.
The Act makes it a criminal offence to carry on an investment business (as defined) without a licence, and changes some investment regulations. As well as being a criminal offence, an unlicensed agreement will be unenforceable. This mirrors a provision of the Consumer Credit Act 1994 which proved effective in controlling hire purchase agreements.
The task of enforcing the new investment regulations is entrusted to the Securities and Investments Board (SIB) which was specially set up for this purpose.
A person conducting an investment business may be authorised in one of these ways:
1 directly from the SIB,
2 by membership of a self-regulating organisation (SRO),
3 certification by a recognised professional body (RPB).
The prospective SROs are:
1 Association of Futures Brokers and Dealers (AFBD),
2 Financial Intermediaries, Managers and Brokers Regulatory Association (now FSA),
3 Investment Management Regulatory Organisation (IMRO),
4 Life Assurance and Unit Trust Regulatory Organisation LAUTRO is no longer in being - see: FSA (Financial Services Authority)
5 Securities Association (a merger between the Stock Exchange and the International Securities Regulatory Organisation).
The RPBs are likely to include the Law Society (for solicitors) and the major accountancy bodies.
Corporate treasurers, public bodies and banks are generally exempt, but pension funds are not. There are special provisions for insurance companies, friendly societies, collective investment schemes and people authorised in another EEC country.
Under the Financial Services Act 2024, it will be an offence to make a misleading statement in connection with an advertisement; employees in an investment business must be 'fit and proper'people; and investors who lose money as a result of a breach of the SIB rules will be able to claim damages. The SIB also has powers to discipline investment businesses, to prevent employment of unsuitable people in those businesses, and to intervene in the conduct of business transacted by an authorised person. The SIB will also have powers to investigat
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