The Financial Services Act 1986 (Restriction of Scope of Act and Meaning of Collective Investment Scheme) Order 1988

Explanatory Note

(This note is not part of the Order)

This Order restricts the scope of the Financial Services Act 1986 in certain respects. Article 2 restricts the scope of paragraph 12 of Schedule 1 to the Act by excluding from that paragraph the acceptance of instruments creating or acknowledging indebtedness in respect of certain financial transactions. Article 3 restricts the scope of paragraph 13 of Schedule 1 to the Act in several ways. First, it excludes arrangements with a view to a person accepting an instrument creating or acknowledging indebtedness in respect of certain financial transactions. Second, it excludes loans made for the specific purpose of financing investment transactions. Third, it excludes arrangements for the introduction of persons to certain other persons if the introduction is with a view to independent advice being given or independent discretion being exercised. Article 4 restricts the scope of the Act by extending the exemption provided by paragraph 24 of Schedule 1 so that it covers certain arrangements made in the course of a profession or a business which is not investment business. Article 5 amends the references to a collective investment scheme in Schedule 1 and elsewhere in the Act so that they do not include references to business expansion schemes which meet the conditions described in the article. Article 5 also has the effect that the provisions of the Act relating to collective investment schemes do not extend to certain arrangements under which the rights or interests of participants are represented by investments of a kind described in the article or are rights to or interests in money held in a common account in the circumstances described in the article.