UNITED KINGDOM Law and Practice Contributed by: James Burnie, Kathryn Dodds, Olga Antonova and Nicky Androsov, gunnercooke llp
3.2 Legacy Players’ Implementation of Solutions Introduced by Robo-Advisers Generally, legacy players are seeking to use robo- advisers to further their own businesses. This may be by making products available to robo-advisers so that customers are advised to participate in them, or it may be by making a robo-advice platform (which may be under a different brand) with a remit to sell products sold by the legacy player. In the second case, care needs to be taken to ensure that consumers are not misled into thinking that the advice they receive takes into account a broader range of products than that actually considered – and there is specific regulation to ensure that this is the case. 3.3 Issues Relating to Best Execution of Customer Trades The United Kingdom has implemented MiFID II , and, as a result, has generally the same best execution obligations as applicable to investment firms in the EU. Firms are required to deliver best execution tak - ing into account factors such as price, costs, speed, likelihood of execution and settlement, size, nature or any other consideration relevant to the execution of an order. 4. Online Lenders 4.1 Differences in the Business or Regulation of Fiat Currency Loans Provided to Different Entities There are substantial differences between loans to individuals and loans to corporate entities. Where a loan falls within the definition, for example, of “credit agreement”, being defined as the provision of credit to: • individuals; • partnerships consisting of two or three persons not all of whom are bodies corporate; or • an unincorporated body of persons which does not consist entirely of bodies corporate and is not a partnership, this is highly regulated, and there are prescribed obli - gations regarding matters such as the terms on which
there may be better ways of obtaining the outcomes of such rules, with less inconvenience to the custom - er, through the use of new innovations. As a result, particularly as the UK has greater freedom to amend its AML and Sanctions Rules post-Brexit, it may be that there are changes to these rules in the future as part of making the UK financial services sector more competitive. 2.15 Financial Action Task Force (FATF) Standards Anti-money laundering and sanctions rules follow the standards imposed by the Financial Action Task Force. 2.16 Reverse Solicitation Whilst the position is complex, in practice, reverse solicitation does not exist in the United Kingdom, and certainly cannot be used as a way of marketing regu - lated products into the United Kingdom. The restrictions on financial promotions apply to any communication that is capable of having an effect in the United Kingdom. Whilst there is an exemption to the financial promotion restriction, the exemption is very narrowly defined; for example, it can only be of relevance to corporate customers or others who are acting in the course of business. There is also a more fundamental difficulty: if no prior promotion has taken place, it is hard to see how a customer would know to enquire about a particular product in the first place. This makes it difficult to rely on the exemption with any confidence in practice, and the use of reverse solicitation is therefore generally avoided. 3. Robo-Advisers 3.1 Requirement for Different Business Models There is a single regulated activity of giving investment advice, which applies to certain asset classes such as securities. All in-scope assets are regulated under the same set of rules and requirements. Giving advice in relation to unregulated crypto-assets is not regulated – only advice in relation to a security token is regulated.
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