Under the designated activities regime (DAR), we can regulate certain activities, even if they are carried out by someone who is not authorised by the FCA.
Why we need extra rule-making powers for designated activities
As part of its regulatory framework reforms, the Treasury aims to enable the FCA to replace firm-facing requirements in assimilated law (previously known as retained EU law) with Handbook rules.
Some activities currently regulated under assimilated law are not ‘regulated activities’ under the Financial Services and Markets Act 2000. These activities may be carried out by non-financial services entities or persons without needing to be authorised by us (for example, seeking to list a company’s shares on a regulated market).
We currently supervise and enforce these activities under assimilated law, but, in many cases, we lack rule-making powers for them in relation to unauthorised persons.
The DAR framework enables the Treasury to ‘designate’ activities, and to give us rule-making, supervisory and enforcement powers over these activities.
Who must comply with the designated activity rules
Anyone carrying out a designated activity will need to follow both:
- the requirements of designated activity legislation
- our rules for that designated activity
Our rule-making under the DAR will apply in relation to the designated activity, but not to the other unrelated activities of the person carrying on the designated activity.
There is no requirement for authorisation under the DAR. Therefore, designated activities can be carried out by both authorised and unauthorised persons.
However, some persons carrying on a designated activity may simultaneously be carrying on a ‘regulated activity’ that does need FCA authorisation, as is the case for the assimilated law that the DAR replaces.
Which activities are designated
The Treasury is designating certain activities to allow us to make rules to replace relevant provisions in assimilated law[1] that are being repealed.
The Treasury can also designate more activities in future, besides those currently regulated under assimilated law. This will ensure that the regulatory framework and perimeter can adapt as needed.
For example, if an activity needs to be regulated, but an authorisation requirement would be disproportionate, the Treasury could bring it into the DAR.