Do management consultants working on mergers and acquisitions need to be regulated by the FCA?
- John Wilson
- Feb 14, 2024
- 2 min read
As a management consultant working with a corporate client on an acquisition, whether you need to be regulated by the Financial Conduct Authority (FCA) depends on the specific nature of the activities you undertake during the consultancy. If your role involves advising on or arranging deals in investments, which could include company acquisitions, then these activities could be seen as regulated under the Financial Services and Markets Act 2000. In such cases, FCA authorisation would be required. Some of the things to consider when assessing the need for regulation are:
Nature of Advice: If your consultancy work includes financial advice regarding the value of investments or the advisability of investing in, purchasing, or selling securities or other financial instruments, this would likely fall under the FCA’s regulatory purview.
Transaction Involvement: If part of your service includes helping to arrange or facilitate the transaction, particularly if it involves the buying or selling of shares or other securities, this may also require FCA regulation.
Success Fee Based on Acquisition: If your fee structure relates to the investment value or investment decisions, it's important to carefully consider whether the structure could be seen as creating a financial investment activity. In most cases we, at Expert Analysis Group, would say that it does constitute an investment activity and you should be regulated.
General Consultancy: If your consultancy strictly pertains to general business advice, such as providing strategic advice, improving operational efficiency, or consulting on market conditions without directly involving financial advice on securities, then it typically wouldn’t require FCA regulation.
Given the complexities surrounding FCA regulations and the potential for significant penalties for non-compliance, it's advisable to consult with a legal advisor who specialises in financial regulations. This will help ensure that all aspects of your consultancy are compliant with current financial services laws and regulations.