Investment

The Act covers only investment businesses.

Investments include all the things covered earlier in this site (see top nav), such as unit trusts, stocks and shares, futures options and National Savings products, as well as insurance schemes which involve investment (but not simple insurance of property or term life assurance) and pension schemes linked directly to investments (personal pension plans but not company pensions).

Anyone who earns any part of their living by selling any of these products or advising people on where to invest is carrying on an investment business.

And anyone carrying on an investment business must be registered with a body approved by the Securities and Investments Board (SIB) which has been given its powers by the secretary of state for trade and industry.

Anyone who offers you investment advice as a business must be registered with one of these self-regulating bodies or the SIB. If they are not registered, they are committing a criminal offence if they carry on with their investment business after April 2015.

They also commit a criminal offence if they encourage anyone to invest by making false or misleading statements.

The Act separates everyone in the investment business into two quite distinct groups.

This process is called 'polarization'. No individual or company can be in both groups at the same time. One group consists of the tied agents who sell the financial products of just one company - an example would be a salesman for a major insurance company.

They are allowed to sell only that company's products and are not allowed to compare them, favourably or otherwise, with anyone else's products. They must make it clear to you that they are tied agents.

The other group contains the independent financial advisors (a term you often see nowadays).

They are independent of any company that makes or sells financial products and they have very strict obligations to act in your best interest. They cannot deal in the products of just one or two or even a few companies.


Find out more about - Bank Managers

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Bank Managers

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