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FCA provides welcome clarification, but care still needed in drafting

Introduction

In a welcome announcement for participants and advisers in the UK loan market, the UK financial regulator the Financial Conduct Authority (FCA) recently confirmed that the Court of Appeal decision in Fons Hf v Pillar Securitisation Sarl ([2014] EWCA CIV 304 (March 20 2014)) has not altered its interpretation or application of the regulatory perimeter prescribed by Financial Services and Markets Act 2000.

Before this clarification, the Fons ruling raised legal uncertainties as to whether loan agreements are "specified investments" under Article 77 of the Financial Services and Markets Act (Regulated Activities) Order 2001, and therefore whether certain participants in the loan market carrying out activities which hitherto have not been regulated must be FCA authorised in order to conduct their business.