Property
We work particularly closely with the investment property sector, where financial services regulation is having an increasing impact. Although real property as such is not an investment within the scope of the FSMA, property companies and advisers are increasingly involved with funds and similar vehicles which are subject to financial services regulation, even if the underlying property itself is not. We advise a number of the major firms of surveyors – and smaller specialist property firms too – on the regulatory issues and compliance implications of their investment or fund management activities.
We have assisted firms with perimeter advice in relation to whether proposed property or land schemes, or even hotel room investments, are likely to be considered collective investment schemes. Where a firm's proposed activities do fall within the scope of FSMA, we have become involved in assisting with applications for FSA authorisation.
For larger firms, we have provided consultants as secondees to provide interim compliance support, often across more than one regulated entity within the group. We have also assisted group companies with developing their European money laundering strategy, as well as helping prepare for MiFID.
Typically one of the key issues for property firms is the complex legislation around the promotion of unregulated collective investment schemes, which are often used when structuring property deals, and which cannot be promoted to the general public. We have assisted firms in not only the delivery of appropriate training but also the development of appropriate systems and controls to ensure that all marketing activity is conducted in accordance with the regulations.
MiFID has also had a major impact on the way in which property firms deal with their customers and in particular around the classifications of retail and professional clients. Many firms now find that it is difficult to opt a retail client up to professional status and thus find that they require permissions to deal with retail clients which brings with it an extra layer of regulatory scrutiny (for example, in relation to the FSA's treating customers fairly initiative). We can help firms address the cultural issues which can arise and to translate the FSA's expectations into a strategy which is meaningful for their business.
We also assist firms with a range of other compliance issues such as questions of corporate structure – whether one or more new vehicles should be established to service regulated activities, and how activities can be structured in order to meet regulatory capital requirements in the most efficient and cost-effective way. We have helped with applications for authorisation of new entities, and the regulatory consequences of changing status from partnership to LLP. We have prepared procedures and other working documentation, and developed tailored training programmes, delivered both face-to-face and through e-learning platforms.
Many property firms also carry out general insurance activities ranging from arranging and the provision of advice through to the handling of claims. The FSA takes a principles-based approach to the regulation of insurance mediation. This allows firms some flexibility in deciding how they will comply with the requirements by focusing on the outcomes rather than the specific method of delivery, but may also bring a level of uncertainty in understanding exactly what the FSA's expectations may be. We have specific in-house insurance expertise and provide support to a number of property clients in this area ranging from the provision of advice in relation to specific compliance queries and perimeter issues through to carrying out healthcheck reviews which test a firm's compliance in a number of different areas such as corporate governance and documentation.
The options for regulation in the property area are not always straightforward. With our extensive experience in this area, we are particularly well placed to advise property firms both on whether their activities require authorisation and if so on the options available.