The FCA has updated the content of its ‘Trading names’ web page by adding information across the page to help firms meet requirements. The aim of the page is to help firms to learn what they should and should not do when registering a trading name that is different to the firm’s registered company name.
The web age covers the use of ‘sensitive words’ (more commonly known as ‘sensitive business names’), and outlines where consumer harm can occur:
- If your firm is carrying out unregulated activities under a trading name
- Consider your requirements under our Consumer Duty
- Consider how many names you trade under
Under the heading ‘Trading names and regulatory breaches’ the FCA reminds firms that:
- registering a trading name with us has no legal effect;
- adding a third party as one of a firm’s trading names does not change that person’s regulated status, or mean that an unauthorised person can carry out regulated activities;
- if that person carries out regulated activities without being authorised or exempt, they’re likely to be carrying out unlawful unauthorised business;
- registering a trading name is not an alternative to becoming authorised or appointed as an Appointed Representative (AR);
- a trading name describes a name under which a firm carries on its own business.
By contrast, an AR is a separate legal person, carrying on its own business for which the Principal firm has accepted responsibility.
- Firms should therefore carefully consider the consistency of these concepts. Presenting an AR as a trading name of the Principal firm is likely to be misleading, as it may obscure the identity of the entity carrying on the business, and give a false impression about regulatory status.
- It’s a criminal offence for a person who isn’t authorised or exempt to carry on regulated activity in the UK – with a potential penalty of 2 years’ imprisonment, a fine or both.
- The authorised person that registered the trading name may also be in breach of our rules, because inappropriate registration or use of trading names could mislead consumers and create risk of harm.
- Firms should not engage in this practice, as doing so may breach FCA requirements, including the obligation to communicate with customers in a way that is clear, fair and not misleading.