PERG: The Perimeter Guidance Manual Explained

Determining What’s Regulated, Whether You Need Authorisation, and the Boundaries of FCA Jurisdiction

PERG — the Perimeter Guidance Manual — is the FCA Handbook module that provides authoritative guidance on which activities fall within the FCA’s regulatory perimeter. PERG addresses the question every business contemplating financial services activity must answer: do my proposed activities require FCA authorisation? The substance is technical — interpreting the Regulated Activities Order, the FSMA framework, and decades of regulatory precedent — but the practical importance is fundamental. Operating regulated activity without authorisation is a criminal offence under section 23 of FSMA. Wrongly concluding that activity is unregulated when it is regulated exposes principals to enforcement, customer claims, and contracts that may be unenforceable.

This guide explains how PERG actually works in practice — its structure, how perimeter analysis is conducted, the principal regulated activities and how to identify them, the common boundary cases and grey areas, and the recurring patterns where firms get perimeter analysis wrong. It also covers the recruitment dimension — the senior compliance and legal expertise needed for substantive perimeter analysis, particularly in firms operating novel business models.

What’s missing from most online explanations of PERG is the practical interpretation of boundary cases. The framework is well-documented; what’s harder to find is how to navigate the genuinely ambiguous situations where activities sit close to the regulatory perimeter — and where wrong conclusions have substantial consequences. That’s the gap this guide fills.

Why PERG Matters

The general prohibition under section 19 of FSMA is uncompromising: no person may carry on a regulated activity in the UK unless they are authorised or exempt. Breach is a criminal offence under section 23. Beyond criminal liability, breach has commercial consequences:

• Contracts entered into in breach of the general prohibition are typically unenforceable by the firm
• Counterparties have rights to recover money paid under such contracts plus compensation for loss
• Senior individuals involved face personal regulatory consequences and potential criminal liability
• Insurance coverage for resulting claims may be excluded
• Subsequent FCA authorisation applications face significant Fit & Proper concerns

For these reasons, perimeter analysis is one of the most consequential pieces of regulatory work any business considering financial services activity must conduct. Wrong conclusions are very costly to correct.

The Structure of PERG

PERG is structured into chapters covering different aspects of perimeter analysis:

• PERG 1 — overview of regulated activities and the perimeter framework
• PERG 2 — authorisation and regulated activities
• PERG 3A — guidance on insurance distribution activities
• PERG 4 — guidance on regulated activities for mortgages
• PERG 5 — insurance distribution activities and IDD
• PERG 6 — collective investment schemes
• PERG 7 — periodical publications, news services and broadcasts
• PERG 8 — financial promotions
• PERG 9 — meaning of “open-ended investment company”
• PERG 10-12 — various activity-specific guidance
• PERG 13 — guidance on MiFID activities
• PERG 14 — guidance on home reversion and home purchase activities
• PERG 15 — guidance on the scope of MCD
• PERG 16 — scope of MiFID
• PERG 17-21 — various sector-specific guidance
• PERG 22 — claims management activities
• PERG 23 — guidance on certain investment activities
• PERG 24-26 — other specialist topics

The breadth of PERG reflects the breadth of regulated activities — which span investment, banking, insurance, payments, lending, advice, custody, and many specialist areas.

The Regulated Activities Framework

The substantive list of regulated activities is set out in the Regulated Activities Order (FSMA 2000 (Regulated Activities) Order 2001, as amended). The Order operates by:

• Defining specific regulated activities
• Defining specific investments to which those activities relate
• Setting out exclusions and exemptions from each activity

For an activity to be regulated, it must:

1. Fall within a specified regulated activity
2. Be carried on “by way of business”
3. Relate to a specified investment (where applicable)
4. Not fall within an applicable exclusion

Principal regulated activity categories

The principal categories include:

• Deposit-taking — accepting deposits from the public
• Issuing electronic money — under EMR framework
• Payment services — under PSR framework
• Insurance contracts — effecting and carrying out
• Insurance distribution — under IDD framework
• Investment activities — including dealing, arranging, managing, advising on investments, operating CIS
• Mortgage activities — entering into, administering, advising on, arranging mortgages
• Consumer credit — providing credit, broking credit, debt management
• Specialist activities — including custody, safeguarding and administration of investments, certain trading activities
• Cryptoasset activities — currently primarily under MLR 2017 with broader regulatory framework being developed
• Funeral plan activities — added to the regulatory perimeter in 2022

For full authorisation context, see our How to Become FCA Authorised Guide.

Conducting Perimeter Analysis

Effective perimeter analysis follows a structured methodology:

Step 1: Activity description

Describe the proposed activity with sufficient detail to engage with the regulatory framework — what specifically is being done, with whom, in what context, and what the financial consequences are.

Step 2: Investment identification

Where the activity relates to specific investments (shares, bonds, derivatives, insurance contracts, mortgages, etc.), identify which specified investments are engaged.

Step 3: Activity classification

Map the activity to specific regulated activity definitions in the Regulated Activities Order. Multiple regulated activities may be engaged.

Step 4: “By way of business” test

Confirm whether the activity is being carried on “by way of business” — generally meaning more than incidental activity in the context of a commercial enterprise.

Step 5: Exclusion analysis

Identify any exclusions that may apply — exclusions are activity-specific and often substantively narrow.

Step 6: Conclusion

Reach a conclusion on whether each component of the proposed activity engages a regulated activity, with documented reasoning.

Step 7: Authorisation strategy

Where regulated activity is engaged, plan the authorisation approach — direct authorisation, AR arrangement, exemption reliance, or activity restructuring to avoid the perimeter.

Common Perimeter Boundary Cases

Many activities sit close to regulatory perimeter boundaries, requiring substantive analysis:

Information vs advice

Providing information about financial products is generally not advising on investments. Recommending specific products to specific customers is. The boundary is genuinely substantive — particularly for digital platforms, robo-advice models, and content-based businesses.

Introducing vs arranging

Introducer activity that simply refers customers to authorised firms may avoid the regulated activity of arranging — but the boundary depends on the substance of the introduction. Substantive engagement with the financial decision can constitute arranging.

Personal investment vs investment management

Managing your own investments is not a regulated activity. Managing investments of others — even on a small scale or for friends/family — may be. The “by way of business” test interacts with this.

Lending vs deferred consideration

Providing credit is regulated. Allowing a counterparty to defer payment for goods or services may not be — but the boundary depends on the structure.

Cryptoasset activities

Cryptoasset activities have historically been a substantial perimeter analysis area — particularly around what activities engage MLR 2017 registration, which engage broader regulatory requirements, and how new cryptoasset activities map to existing regulatory categories.

Buy-now-pay-later

BNPL has been a substantive perimeter analysis area, with the regulatory treatment evolving as the FCA brings specific BNPL activities within the perimeter through new legislation.

Insurance vs warranty

Insurance contracts are regulated; warranties may not be. The boundary depends on the substance of the obligation, not just the labelling.

Discretionary vs non-discretionary

Investment management with discretionary authority is a different regulated activity from non-discretionary advisory arrangements. The substance of the authority granted matters more than the contractual labelling.

Wholesale vs retail

Some regulated activities have specific wholesale exemptions or different rules for wholesale-only activity. The classification of customers as wholesale or retail can affect both whether the activity is regulated and what rules apply.

Exclusions and Exemptions

The Regulated Activities Order includes various exclusions and exemptions:

Activity-specific exclusions

Each regulated activity has specific exclusions that narrow its scope. Common examples include exclusions for activities undertaken in the course of a profession or non-investment business, certain activities by employers in relation to employees, and various sector-specific narrowing.

The Article 72E exemption

One of the more frequently invoked exemptions, applying to activities that arise in the course of carrying on certain non-financial businesses where the financial activity is incidental.

The overseas persons exclusion

For non-UK firms providing services to UK customers — though the exclusion has narrowed over time and is now limited.

The corporate finance contact exclusion

For certain corporate finance activities involving sophisticated investors.

Exclusion analysis is technical and frequently requires specialist legal advice. Generic reliance on exclusions without substantive analysis is a recurring source of perimeter difficulty.

Financial Promotions Perimeter

PERG 8 specifically addresses financial promotions — covered separately by section 21 of FSMA. The financial promotion regime operates as a distinct perimeter:

• Communicating financial promotions in the UK is restricted under section 21
• Promotions can only be communicated by authorised persons or with the approval of authorised persons
• Specific exemptions apply — typically requiring detailed analysis
• Recent regulatory reform has tightened the financial promotions framework, particularly for high-risk investments

Financial promotions perimeter analysis is operationally important for any business communicating about financial products — including digital platforms, content businesses, and businesses with corporate finance activity.

When Activities Become Regulated — Perimeter Expansion

The regulatory perimeter has expanded over time. Recent expansions include:

• Funeral plans (2022) — brought from voluntary regulation into FCA authorisation
• Cryptoasset MLR 2017 registration (2020) — bringing certain cryptoasset activities into AML supervision
• Buy-now-pay-later — phased regulation as the activity has grown
• Pre-paid card products — various tightening over time
• Claims management activities (2019) — moved from voluntary regulation to FCA

Firms operating in evolving sectors should monitor regulatory perimeter developments — activity that is currently outside the perimeter may move within it through legislative change.

Common Perimeter Pitfalls

Reliance on labelling rather than substance. Where activities are labelled as not constituting a regulated activity but the substance engages the regulatory definitions.

Generic exclusion reliance. Where exclusions are invoked without substantive analysis of whether the specific activity meets the exclusion criteria.

“By way of business” misapplication. Where the test is interpreted too narrowly to exclude commercial activity.

Failure to update perimeter analysis. Where activity evolves over time and earlier perimeter analysis is no longer current.

Inadequate documentation. Where conclusions are reached without documented analytical reasoning.

Multi-activity gaps. Where some elements of an activity are correctly identified as regulated but others are missed.

Cross-border perimeter issues. Where activity spans multiple jurisdictions and UK perimeter implications are not fully analysed.

Financial promotion overlap. Where the regulated activity perimeter is correctly assessed but the financial promotion perimeter is missed.

Regulatory change blindness. Where firms operate on perimeter analysis that doesn’t reflect more recent regulatory developments.

PERG and Senior Recruitment

Effective perimeter analysis requires specific senior expertise:

• Senior compliance leadership — typically SMF16 (see our SMF16 Guide) — owns overall regulatory perimeter responsibility
• General counsel / Head of Legal — substantial perimeter analysis sits at the regulatory/legal boundary
• Specialist regulatory counsel — for novel business models, external specialist legal advice is frequently necessary
• Regulatory consultants — particularly for firms in sectors with active regulatory development

For firms operating novel business models or in sectors with active regulatory development (cryptoassets, fintech, BNPL), perimeter analysis capability is a meaningful senior team consideration. Firms operating close to the regulatory perimeter without strong perimeter analysis capability face substantial regulatory risk.

Further Reading and Authoritative Sources

For PERG itself, see PERG in the FCA Handbook. For the Regulated Activities Order, see the legislation.gov.uk page. For FSMA, see FSMA 2000.

Related Guides: FCA Handbook and Authorisation

Part of FD Capital’s series of practical guides for FCA-regulated firms: SYSC — Senior Management Arrangements | PRIN — The 11 FCA Principles | SUP — The Supervision Manual | DISP — Dispute Resolution | How to Become FCA Authorised | The FCA Application Process & Costs | FCA Threshold Conditions | The Appointed Representative Regime | SMF16 — Compliance Oversight