Becoming licensed under the DPB
Advice given on an investment or insurance contract in the UK will almost invariably be a regulated activity under the Financial Services & Markets Act 2000. It is a criminal offence, under this Act, to provide advice without the proper authorisation either from the Financial Conduct Authority (FCA) or from a designated professional body.
Why become licensed under the DPB?
A designated professional body (DPB) licence allows an actuarial firm to provide some regulated activities without being subject to the full FCA regulation. Our DPB handbook represents a more focused and appropriate approach to regulation, although it only applies to certain activities. The DPB licence allows firms to advise business clients on investments and general insurance contracts but does not permit specific advice to be given to individuals.
If an actuarial firm wishes to advise individuals, it must be regulated by the FCA. A firm can do this, either by being fully authorised by FCA for all classes of business; or by being jointly authorised by the Institute and Faculty of Actuaries, for business clients, and the FCA for individual clients. This is known as being an approved professional firm.
You can find more about the type of work that can be performed by a firm with a DPB licence here.
What are the options for becoming authorised to undertake regulated activities?
The options for a firm to become regulated are:
- If the firm is managed or controlled* by Fellows of the Institute and Faculty of Actuaries, and the firm only wishes to perform the type of work covered in this list, the firm can apply for a DPB licence
- If the firm is managed or controlled* by Fellows of the Institute and Faculty of Actuaries, and the firm wishes to perform activities which are prohibited under the DPB handbook, the firm can apply to the FCA for authorisation as an approved professional firm to perform these activities and then apply to the Institute and Faculty of Actuaries for an approved professional firm licence. This will allow the firm to follow the lighter touch of the DPB handbook for non mainstream business, as detailed in this list. Please also read APS D1.
- If the firm is not managed or controlled by actuaries, it will not be possible to grant a DPB licence. If the firm still wishes to perform regulated activities, an application must be made to the FCA.
* In this context, managed by actuaries means that more than half of the partners or directors are Fellows of the Institute and Faculty of Actuaries and controlled by actuaries means that more than half of the ownership of the firm is in the hands of Fellows of the Institute and Faculty of Actuaries. For more details, please contact the DPB.
What are the conditions for obtaining a DPB licence?
The key conditions of carrying out exempt regulated activities as a DPB firm, or non mainstream activities as an approved professional firm are:
- the activity is incidental to the firm’s business
- any commission or other money received as a result of this activity must be accounted for to the client
- the activity must arise out of or be complementary to a particular professional service
- the activity can only be conducted for clients that are trustees of pension schemes, employers or insurance companies.
For more details, please view the DPB handbook.
What is the process for becoming licensed?
For a licence to be granted, you will need to meet the following requirements:
- a certificate of compliance with the professional indemnity insurance requirements in the DPB handbook, issued by the insurance broker
- compliance plan
- business plan and latest accounts
- two testimonials on behalf of each relevant person (see below)
- copy of a standard engagement letter
- complaints handling procedures.
You may be asked to provide additional information.
A licence may be granted subject to some conditions or only in respect of some activities.
Regulated activities should not be undertaken until we have confirmed to you that a licence has been granted.
In order to apply for a licence, two testimonials must be submitted on behalf of each relevant person. One testimonial should be from the most recent employer. The second testimonial should be from another employer or a recent business contact, however if this is not possible, a personal reference may be acceptable.
The testimonials should:
- be on headed paper;
- state the full name and position of the referee;
- state how long the referee has known the relevant person and in what capacity; and
- confirm that the relevant person is fit and proper and detail how, in the opinion of the referee, the relevant person meets this standard.
The DPB licensing year runs from 1 April to 31 March. Fees are payable in advance. Licences cannot be backdated and any late submission may result in a firm being unlicensed and unable to provide services.
The licence fee depends on the number of actuaries, the number of offices and the scope of business the firm wants to undertake.
Fees for 2013/2014:
|For each of the first 10 relevant persons||£1410|
|For each of the next 10 relevant persons||£434|
|For each of the next 20 relevant persons||£172|
|For each relevant person thereafter||£98|
|Plus for each office where investment business is handled||£705|
If you wish to transact insurance mediation business (eg arranging a general insurance contract), the fee is increased by 25%.
We reserve the right to change these fees.