• PRU 1.3 PRU 1.3 Categories of Authorised Persons

    • Guidance

      1. In these Rules, Authorised Persons are assigned "Categories" to create a clear framework for determining the provisions of PRU applying to each Authorised Person. The Rules in this Section enable an Authorised Person to determine into which Category it falls.
      2. The table in A1.1 of App1 sets out the categorisation process diagrammatically. In that table, an emboldened box indicates the Regulated Activity that is determinative of the Category into which an Authorised Person falls. An Authorised Person may, if authorised under its Financial Services Permission to do so, conduct any number of Regulated Activities specified under any lower Category than the one that applies to the Authorised Person in accordance with this Section. (For this purpose Category 5 is considered to be equivalent to Category 1.) For example, a Category 1 firm could conduct any one or more of the Regulated Activities specified under Categories 2, 3A, 3B, 3C or 4 (if authorised to do so). However, a Category 4 firm may only conduct the Regulated Activities listed under Category 4, given that is the Category for which it is authorised.

    • Category 1

      • PRU 1.3.1 PRU 1.3.1

        An Authorised Person is in Category 1 if:

        (a) its Financial Services Permission authorises it to carry on one or more of the Regulated Activities of Accepting Deposits or Managing a Profit Sharing Investment Account which is a PSIAu; and
        (b) it does not meet the criteria of Category 5.

        • Guidance

          A Category 1 Authorised Person may be authorised to conduct other Regulated Activities, but it is the authorisation for Accepting Deposits or Managing a Profit Sharing Investment Account which is a PSIAu that is determinative of its belonging to Category 1.

    • Category 2

      • Guidance

        1. A Category 2 Authorised Person may be authorised to conduct other Regulated Activities, but it is the authorisation for Dealing in Investments as Principal (not only as a Matched Principal) or Providing Credit, and the absence of authorisation for the activities specified in Rule 1.3.1, that are determinative of its belonging to Category 2.
        2. Where the dealing activities of a firm are limited to acting only as Matched Principal, the activities fall in the scope of Category 3A in accordance with Rule 1.3.3(1). A definition of "Matched Principal" is in Rule 1.3.3(2).

      • PRU 1.3.2

        An Authorised Person is in Category 2 if:

        (a) its Financial Services Permission authorises it to carry on one or both of the Regulated Activities of Providing Credit or Dealing in Investments as Principal (not as Matched Principal);
        (b) its dealing activities are not limited in scope as provided in Rule 1.3.3(1)(a)(i); and
        (c) it does not meet the criteria of Categories 1 or 5.

    • Category 3A

      • Guidance

        A Category 3A Authorised Person may be authorised to conduct other Regulated Activities, but it is the authorisation for Dealing in Investments as Agent and the absence of authorisation for the activities specified in Rules 1.3.1 and 1.3.2 that are determinative of its belonging to Category 3A. Provided that an Authorised Person carries out the Regulated Activity of Dealing in Investments as Agent in a manner that is wholly incidental to the activity of Managing an Investment Fund or Managing Assets, the Authorised Person shall be regarded as falling within Category 3C.

      • PRU 1.3.3

        (1) An Authorised Person is in Category 3A if:
        (a) its Financial Services Permission authorises it to carry on one or more of the Regulated Activities of:
        (i) Dealing in Investments as Principal (where it does so only as a Matched Principal); or
        (ii) Dealing in Investments as Agent; and
        (b) it does not meet the criteria of Categories 1, 2 or 5.
        (2) For the purposes of these Rules, an Authorised Person Deals in Investments as a "Matched Principal" if:
        (a) it enters into transactions as a principal only for the purpose of fulfilling its Clients' orders;
        (b) it holds positions for its own account ("positions") only as a result of a failure to match Clients' orders;
        (c) the total market value of the positions it holds is no more than 15% of the Firm's Tier 1 Capital Resources; and
        (d) the positions are incidental in nature and are strictly limited to the time reasonably required to carry out a transaction of that nature.

    • Category 3B

      • PRU 1.3.4 PRU 1.3.4

        An Authorised Person is in Category 3B if:

        (a) its Financial Services Permission authorises it to carry on one or more of the Regulated Activities of:
        (i) Providing Custody (where it does so for a Fund); or
        (ii) Acting as the Trustee of an Investment Trust; and
        (b) it does not meet the criteria of Categories 1, 2, 3A or 5.

        • Guidance

          A Category 3B Authorised Person may be authorised to conduct other Regulated Activities, but it is the authorisation for Providing Custody for a Fund or Acting as Trustee of a Fund, and the absence of authorisation for the activities specified in Rules 1.3.1, 1.3.2 and 1.3.3 that are determinative of its belonging to Category 3B.

    • Category 3C

      • PRU 1.3.5 PRU 1.3.5

        An Authorised Person is in Category 3C if:

        (a) its Financial Services Permission authorises it to carry on one or more of the Regulated Activities of:
        (i) Managing Assets;
        (ii) Managing a Collective Investment Fund;
        (iii) Providing Custody (where it does so other than for a Fund);
        (iv) Managing a Profit Sharing Investment Account which is a PSIAr;
        (v) Providing Trust Services (where it is acting as trustee in respect of at least one express trust); or
        (vi) Providing Money Services; and
        (b) it does not meet the criteria of Categories 1, 2, 3A, 3B or 5.

        • Guidance

          A Category 3C Authorised Person may be authorised to conduct other Regulated Activities, but it is the authorisation for Managing Assets, Managing a Collective Investment Fund, Providing Custody other than for a Fund or Managing a Profit Sharing Investment Account which is a PSIAr, Providing Trust Services (where it is acting as a trustee in respect of at least one express trust) or Providing Money Services, and the absence of authorisation for the activities specified in Rules 1.3.1, 1.3.2, 1.3.3 and 1.3.4 that are determinative of its belonging to Category 3C.

    • Category 4

      • PRU 1.3.6 PRU 1.3.6

        An Authorised Person is in Category 4 if:

        (a) its Financial Services Permission authorises it to carry on one or more of the Regulated Activities of Arranging Credit, Arranging Deals in Investments, Advising on Investments or Credit, Arranging Custody, Insurance Intermediation, Providing Trust Services (where it is not acting as trustee in respect of an express trust), Insurance Management, Acting as the Administrator of a Collective Investment Fund, Administering a Specified Benchmark, Operating a Credit Rating Agency, Operating a Multilateral Trading Facility or Organised Trading Facility, Operating a Representative Office or Providing Information in Relation to a Specified Benchmark; and
        (b) it does not meet the criteria of Categories 1, 2, 3A, 3B, 3C or 5.

        • Guidance

          An Authorised Person in Category 4 may not be authorised to conduct any other Regulated Activity beyond those listed in Rule 1.3.6(a); if it were so authorised it would belong to another Category.

    • Category 5

      • PRU 1.3.7

        An Authorised Person is in Category 5 if it:

        (a) is an Islamic Financial Institution; and
        (b) Manages a Profit Sharing Invesment Account which is a PSIAu.

      • PRU 1.3.8 PRU 1.3.8

        Authorised Persons which carry out Regulated Activities other than and in addition to Islamic Financial Business will be required to comply with the relevant capital requirements which apply to those Regulated Activities.

        • Guidance

          Authorised Persons in Categories 1 to 4 may also carry out Islamic Financial Business, but only those Authorised Persons in Categories 1 or 5 may Manage a Profit Sharing Investment Account which is a PSIAu. They will not fall within Category 5 unless the whole of the business is conducted in accordance with Shari'a and they Manage a Profit Sharing Investment Account which is a PSIAu, carry on Islamic Financial Business or carry out Shari'a-compliant Regulated Activities.