Financial
Services Regulation In The UK
The
conducting of investment business, and incidentally
the advertising of investments, in the UK is regulated
by the Financial Services Authority ('FSA') under
the Financial Services Act 1986 ('The Act').
Full
information about the operations of the FSA can
be found at its website, www.fsa.gov.uk
; the text of the Act and explanatory notes can
be found at the Office of Public Sector Information,
http://www.opsi.gov.uk/
In
2000, a new Financial Services Act ('The 2000
Act') was passed by Parliament and is now on the
statute book, followed by numerous sets of subsidiary
regulations issued by the Treasury in subsequent
years. Much of this regulation can be found at
http://www.hm-treasury.gov.uk/
.
Although
the 2000 Act was a very large and wide-ranging
piece of legislation, and contained numerous detailed
changes to the previous statutory regime, it can
be seen more as a piece of codification than as
a piece of new legislation. Its most important
result was to bring financial services regulation
together, directly under the FSA, whereas previously
regulation was exercised through a series of self-regulatory
bodies such as the Pensions and Investment Authority,
the Securities and Futures Association, etc.
In
broad terms, the 2000 Act did not change the position
as regards the advertising and sale of investments
in the UK, which is sketched below. NB The legislation
is highly complex, and this general outline is
nothing more than a brief introduction. You should
not rely on it and should take professional advice
before making investments or taking any other
connected action.
The
Act requires that any person (individual or company)
involved in providing, marketing and selling investments
to UK residents should be authorised, and that
advertisements to the public should be in relation
only to products offered by such authorised providers.
There are some exceptions for investments offered
only to limited numbers of experienced, professional
or 'high net worth' investors; but for most UK
residents the Act means that they will be offered
only products and services which are authorised.
In practice that means that the investments offered
are not risky, comparatively speaking, and that
(depending on the investment) some type of compensation
will be available in the event of failure of the
investment provider.
Before
the Internet, it was reasonably clear that a publication
(UK or otherwise) with a significant UK readership
was not permitted to include advertisements for
unauthorised products or services (eg offshore
hedge funds or equity brokerages). One of the
purposes of the 2000 Act was to clarify the circumstances
under which an Internet site can carry unauthorised
advertisements, and there are a number of tests
according to which a site will be judged. The
key test is whether a site is directed towards
UK residents, and this determination will depend
on the nature of the products and services advertised,
together with the 'defences' which the site erects
against unauthorised viewing of them.
The
InvestorsOffshore site is not directed to UK residents.
It sets out to advise expatriates and global 'high
net worth' investors market about investments
available to them world-wide, and the jurisdictions
where such investments are available. The site
therefore makes it clear that advertisements carried
are not authorised to be viewed by UK residents,
and requests such individuals not to view them.
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