What is a written legal opinion on the FCA perimeter?

What a perimeter opinion covers

A perimeter opinion applies the law to your business. The solicitor looks at the facts you give them and analyses whether the activities you carry on are regulated activities under the Financial Services and Markets Act 2000 (FSMA) and the Regulated Activities Order, or payment or e-money services under their own regulations. Where it is in scope, they also look at whether your marketing involves financial promotions under section 21 and the Financial Promotion Order.

The analysis usually works through the relevant definitions, any exclusions or exemptions you rely on and the conditions attached to them. It records the facts and documents relied on and any assumptions made. Its conclusions may be qualified, for example where the answer depends on how something is done in practice or where the law is not settled.

The scope is agreed with the solicitor at the start. An opinion can cover the operations test, the marketing test or both, and it can be limited to one product or revenue line. Why the two tests are separate

What it is used for

Most businesses ask for a perimeter opinion because someone else needs to understand their position. Common reasons include:

• a bank or payment provider asking you to show that you do not need FCA authorisation before opening or keeping an account
• an investor carrying out due diligence before committing money, or an acquirer reviewing the business before a purchase
• an advertising platform asking about your regulatory status before running financial services adverts
• a lender, insurer or other partner asking how you are able to introduce or distribute without permission
• a board that wants comfort before launching a product or changing the business model

What the solicitor will need

An opinion is only as useful as the information it is based on. The solicitor will usually ask for:

• a clear description of your business model and each revenue line
• how money flows, including who pays whom, when and through which accounts
• who your customers are, for example companies, sole traders, consumers or investors
• your customer and partner contracts, terms and conditions and any fee arrangements
• your website and marketing materials, including social media and investor materials
• your group structure and any planned changes to what you do

Expect questions. A solicitor who probes the detail is testing whether the facts support the conclusion.

Only as good as the facts

An opinion depends on the facts supplied. If those facts are incomplete, or if what happens in practice differs from what was described, the conclusion may not hold. The same applies when the business changes. A new product, a different customer type or a change in who pays you can mean the opinion no longer reflects your position, and it may need to be updated.

Who it is addressed to

The opinion is addressed to you as the client. If you want to share it with a bank, investor or other third party, agree that with the solicitor first. Some third parties ask for a version they can rely on directly, and whether that is possible is a matter for the solicitor and their terms of engagement.

What it does not do

A written opinion is a professional view of how the law applies to your facts. It does not bind the FCA or a court, and it does not make your business authorised or approved by anyone. It is, however, often the most persuasive way to show that you have looked at the question properly.

The FCA does not generally give individual businesses a ruling on whether they are inside the perimeter. Its Innovation Pathways service helps firms with innovative products understand which rules apply, but the FCA says it is not a replacement for legal advice or consultancy and that it will not tell firms how to structure their business. Can the FCA tell me if I am regulated?

How much does a written opinion cost?

As a rough guide, written opinions from the solicitors we work with start from around £8,000 plus VAT. Yours might cost less and it might cost more. It depends on a lot of factors, including how complex your business is, how many activities and promotions need to be covered, whether the law on your point is settled and how much information you have ready. Opinion costs in our FAQs

If we introduce you to a solicitor, their first scoping call is not charged and carries no obligation. If you decide to go ahead, they quote before any work starts. You instruct them and pay them directly. The solicitor will tell you about any referral fee arrangement with us, and the firms we introduce you to pay us an introduction fee. We do not set the solicitor’s fees, so the starting figure above is a guide and not a quote.

Common misunderstandings

When a written opinion helps

A written opinion is most useful when a third party needs to rely on your position, when your business depends on an exclusion or exemption, or when you are about to launch or change something. If you are not sure whether your question needs one, that is what the first call is for. We will tell you whether it does and who should provide it. How it works