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United Kingdom

UK Supreme Court: retail client business is a distinct ‘part’ under FSMA 2000 s 39; principals not liable for appointed representatives’ unauthorised retail dealings outside scope of appointment

Published on: 01 April 2026

Published by a LexisNexis Financial Services expert
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Kession Capital Ltd (in Liquidation) v KVB Consultants Ltd and others [2026] UKSC 11

Background

This appeal concerns the regulation of financial services under FSMA, which bars any person from carrying on a financial services business unless authorised by the FCA. Individuals or firms holding FCA authorisation are described as ‘authorised persons’. Under FSMA 2000, s 39, an authorised person may allow another to conduct a financial services business as its representative; that other person is called an ‘appointed representative’. Section 39 requires that the appointment is effected by a contract specifying the kinds of business (‘business of a prescribed description’) the appointed representative is permitted to undertake. The authorised person must, in writing, accept responsibility for the appointed representative’s activities ‘in carrying on the whole or part’ of that specified business. Accordingly, an authorised person can restrict the permission granted so that the appointed representative carries on only a ‘part’ of a business. By FSMA 2000, s 39(3), the authorised person accepts responsibility ‘for anything done or omitted by the representative in carrying on the business for which it has accepted responsibility’. A client who suffers...

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