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DPB (Investment Business) licence and FCA authorisation

Make the most of the pension reforms and support your clients with their financial planning. Find out how you can enhance the services you already offer your clients with a DPB (Investment Business) licence. This section explains what regulated investment business is, who is regulated, and how your firm can apply for FCA (previously FSA) authorisation or a DPB (Investment Business) licence.

DPB (Investment Business) Essentials 2016 - hints and tips to ensure your firm is making the most of a DPB (Investment Business) licence and what licensed firms should be aware of. An overview of findings from our review of firms in the last year. Download your copy.

Personal Financial Planning: Traffic light guide to regulation. This guide provides a quick reference to what advice is unregulated, what can be provided by DPB (Investment Business) licence holder and what is FCA regulated.

Changes in firm structure – please tell us within 10 business days

It’s important to maintain your firm record accurately. An inaccurate or out of date firm record may constitute a misdescription of your firm. It could also lead to regulatory or disciplinary action.

What is regulated investment business?

Three pieces of legislation:

  • the Financial Services and Markets Act 2000;
  • the Regulated Activities Order (Statutory Instrument 2001, No. 544) as amended; and
  • the Non-Exempt Activities Order (Statutory Instrument 2001, No. 1227) as amended

determine whether - for the purpose of each investment activity undertaken - a firm needs to be authorised by:

  • the Financial Conduct Authority (previously the Financial Services Authority);
  • a designated professional body (DPB);
  • or whether no authorisation or licence is necessary.

In order to conduct 'mainstream' investment business - for example, if your firm recommends the purchase of specific investments (eg, pensions, listed company shares) or approves financial promotions, - the firm needs to be authorised by the Financial Conduct Authority (previously the Financial Services Authority).

In order to conduct 'non-mainstream' investment business - for example, if your firm advises on private company shares, interprets advice given to a client by an authorised person or takes part in discussions with a client and an authorised person - the firm needs to be licensed by ICAEW.

If a firm has no authorisation or licence, the firm may not undertake any regulated investment business.

Investment business also includes advice on mortgages and general insurance. For further information on the types of investment and types of activity that are regulated, see Is it investment business?.

How to apply for a DPB (Investment Business) licence

If your firm wishes to conduct DPB (Investment Business) activities, it must have a licence from ICAEW.

You must:

  • fill in an application form
  • satisfy ICAEW's Investment Business Committee that the firm meets the criteria to carry out investment business work
  • pay an annual DPB (Investment Business) licence fee
  • comply with the DPB (Investment Business) Handbook
  • comply with the Professional Indemnity Insurance Regulations and possibly have the enhanced levels of PII for general insurance business and
  • be monitored by ICAEW.

If any principals are not members of ICAEW (or certain other bodies, see the application form), they will have to become DPB (Investment Business) affiliates. Please fill in and return (with your DPB (Investment Business) licence application form), a DPB (Investment Business) affiliate application form for each such partner who needs to become a DPB (Investment Business) affiliate.

Application forms

DPB (Investment Business) licence for firms

Please refer to the guidance as you fill in the form so that you give us all the information we need.

DPB (Investment Business) affiliate

Individuals or corporate bodies that are principals in an ICAEW firm licensed by ICAEW under the designated professional body DPB (Investment Business) arrangement, but who are not members of ICAEW are required to apply for DPB (Investment Business) affiliate status. Members of ICAS, CAI, ACCA, the Law Society of England & Wales, the Law Society of Scotland, the Law Society of Northern Ireland or the Institute of Actuaries do not need to become DPB (Investment Business) affiliates.

DPB (Investment Business) licence fees

Access information about ICAEW fees, and the fees we collect on behalf of other organisations, including information on how to pay them. There is also a useful FAQs page.

Who is regulated - the firm or the individual?

It is the firm that is either authorised by the FCA (previously the FSA) or licensed by ICAEW - depending on the activities undertaken. In addition, the FCA only allows certain activities to be undertaken by specifically qualified individuals. In DPB (Investment Business) licensed firms, the work must be undertaken by someone who is competent in this area.

How to become an appointed representative of an FCA authorised firm

Firms may wish to consider becoming an appointed representative of an FCA authorised firm for all or certain types of investment business. This route is open to all firms, including those that hold a licence from ICAEW under the Designated Professional Body arrangements.

Under the terms of ICAEW's Code of Ethics, however, a member should consider ‘whether the status of the third party investment business provider is compatible with the requirement to give objective advice’ (section 241, Agencies and referrals).

This means that a professional firm can only become an appointed representative of an independent financial adviser or a ‘whole of market’ firm and this applies for all financial services business, including general insurance and advice on mortgages.

For information on FCA authorisation, visit www.fca.org.uk.

DPB (Investment Business) Handbook

The DPB (Investment Business) Handbook provides full details of our licensing arrangements.

DPB (Investment Business) updates
DPB (Investment Business) helpsheets
DPB (Investment Business) annual return and monitoring

All firms licensed by ICAEW to undertake exempt-regulated investment business (DPB (Investment Business) activities) are required to complete an annual return online. ICAEW carries out DPB (Investment Business) monitoring visits to firms licensed by ICAEW to undertake exempt-regulated activities under the DPB (Investment Business) arrangements. 

Firms licensed for DPB (Investment Business) activities usually receive a combined Practice Assurance and DPB (Investment Business) visit including a review of compliance with the DPB (Investment Business) Handbook and a review of how the firm meets the principles-based Practice Assurance standards. The results of monitoring visits are reported to the Investment Business Committee.

DPB (Investment Business) firms and consumer credit
ICAEW has arrangements in place which enable firms to provide consumer credit services without the need for authorisation from the Financial Conduct Authority (FCA).
 
There’s no application to complete and no fee to pay. If firms meet the eligibility criteria, then such activities can be undertaken, provided that they are undertaken as set out in the DPB (Consumer Credit) Handbook.
 
As these arrangements are made under Part XX of Financial Services and Markets Act 2000 (FSMA), the service may only be provided in a manner incidental to the activity of the firm generally, and which arises out of, or is complementary to, another professional service, which is not itself a regulated activity, provided to a specific consumer client (as with investment business).
 
Under the DPB (Consumer Credit) Handbook, a DPB licensed firm is eligible to use these arrangements, as are firms that are:
  • audit registered under the Audit Regulations; or
  • a member engaged in public practice as a sole practitioner; or
  • a partnership engaged in public practice of which more than 50 per cent or more of the rights to vote on all, or substantially all, matters of substance at meetings of the partnership are held directly by members; or
  • a limited liability partnership engaged in public practice of which more than 50 per cent or more of the rights to vote on all, or substantially all, matters of substance at meetings of the partnership are held directly by members; or
  • any body corporate (other than a limited liability partnership) engaged in public practice of which:
  • 50 per cent or more of the directors are members;
  • more than 50 per cent of the nominal value of the voting shares is held directly by members; and
  • more than 50 per cent or more of the aggregate in nominal value of the voting and non-voting shares is held directly by members. 
However, a firm that is FCA authorised will not be eligible under the new DPB (Consumer Credit) Handbook as the new Handbook utilises Part XX of FSMA and is therefore a form of exemption from FCA authorisation.
 
There is more information available at icaew.com/ccl 

DPB firms that previously held a standard consumer credit licence from the OFT 

By virtue of a statutory instrument issued on 27 March 2014 (The Financial Services and Markets Act 2000 (Consumer Credit) (Transitional Provisions) (No. 2) Order 2014), a firm with a DPB licence - that before 1 April 2014 held an OFT standard licence and after that date has interim permission to undertake credit-related regulated activities - could continue to use the DPB exemption, for a transitional period, for other exempt regulated activities. This transitional period ends when the firm is notified by the FCA that it has ‘full’ permission. At that point, the firm will no longer be eligible to hold a DPB licence and will have to cease the investment and other activities permitted by the DPB Handbook, because a firm cannot be both exempt and FCA authorised. If the firm wishes to continue to undertake these other activities (after receiving full FCA permission for credit-related regulated activities), the firm will need to apply to the FCA for permission to undertake such activities.
 
Firms that are in this position should consider if they wish to:
 
  • withdraw from FCA interim or full permission for undertaking credit-related regulated activities and undertake such of those activities that are permitted under the DPB (Consumer Credit) Handbook and continue with the other DPB investment business activities that they undertake; or
  • seek additional authorisation from the FCA to undertake those investment business activities that were undertaken under the DPB licensing arrangements.
 
Practice management

If you’re managing a practice, you need to comply with regulations covering areas such as PII, clients’ money and anti-money laundering. Find out more.

How to make your DPB (Investment Business) licence work for you

 

 

The DPB (Investment Business) scheme

What are the benefits of a DPB (Investment Business) licence and how to apply – find out by watching this 15 minute webinar.

What does DPB (Investment Business) mean for me?

Find out whether your firm needs a DPB (Investment Business) licence with this 20-minute webinar. If you are already licensed and want a refresher on the various regulations you have to comply with, you will also find this webinar helpful.