Making Sense of VAT & the Provision of Financial Services

Making Sense of VAT & the Provision of Financial Services

For Sense Network Appointed Representative use only - not to be distributed to clients or other third parties VAT and the Provision of Financial Services This guide has been prepared in an attempt to clarify guidance on VAT issued by HMRC concerning the interpretation of HMRC legislation as it applies to income for intermediary firms in the financial services industry. HMRC guidance on financial services and intermediation is available at: HMRC - VAT & Financial Services Intermediaries This should only be used as a general guide and professional assistance sought if you are unsure about your own VAT position. Contents VAT and the Provision of Financial Services... 2 2 General guidance... 3 VAT treatment of services... 3 Intermediary exemption... 3 How do I know that my services qualify as intermediation?... 3 Do I need to do anything other than introduce the two parties to one another?... 4 What does not count as intermediary services?... 4 What about advice that is not related to a product?... 5 What if a client rejects or delays implementation?... 5 What if the product element is only a minor part of the overall charge?... 6 What about ongoing services?... 6 What about discretionary management services?... 7 How do I show that the whole process was undertaken with a view to the sale of a financial services product?... 7 How does Intelligent Office VAT invoicing work?... 8 Client interactions different scenarios... 10 Frequently asked questions... 11 Legislation and HMRC guidance... 14 VAT exempt supplies added tax... 14 Extract from HMRC Notice 701/49 (January 2013): Finance... 16

General guidance VAT treatment of services Supplies of services are taxable from a VAT perspective by default, unless a specific VAT exemption applies. UK VAT law provides for a number of VAT exemptions, some specifically in relation to certain financial services. VAT exemptions should be interpreted strictly, as they are an exception to the general rule of taxation. Intermediary exemption One of the exemptions provided for in UK VAT law is the intermediary exemption. In order for a service to be VAT exempt based on the intermediary exemption, one of the principal parties must be providing a financial service which itself already falls within the VAT exemptions listed in UK VAT law. This may involve the granting of credit, issue and trading of securities, transfer of monies and providing insurance etc. NB: workplace pensions business and consultancy charging Since 14th September 2013 it has not been possible to use consultancy charging in connection with any money purchase workplace pension scheme being used for auto enrolment purposes (this includes occupational money purchase schemes and group personal pension schemes). As a result it will be necessary for the adviser to charge the employer a fee in connection with advice on such schemes. This fee will be subject to VAT. The VAT treatment of charges for advice given to the employees themselves will depend upon the nature of the services provided. In order to fall within the finance or insurance exemptions, it is necessary for the adviser to act as an intermediary (or one of the intermediaries) between the individual employees and the pension provider with a view to the conclusion of an individual pension contract (with the employee paying the adviser fee). If the employer pays for the individual employees to receive advice, the employer fee is subject to VAT. NB: platforms Note that there are separate VAT rules for the supply of platform services. For guidance see HMRC's manual VATFIN 5500. How do I know that my services qualify as intermediation? For a service to qualify for the intermediary exemption, an intermediary must bring together two parties with the view to creating a contract, thereby playing a key role in negotiating the creation of that contract, while being independent of the parties and having no direct interest in the outcome of the contract itself. 3

The scope of negotiation for these purposes includes the following as essential characteristics: Introducing the parties; and/or Acts of negotiation between the parties which effect transaction terms such as price, timing, parties etc. An adviser advising in the financial services market will normally provide some or all of the following services: 1. Gathering information about the client (fact find); 2. Carrying out research to find suitable solutions e.g. investment options; 3. Providing the client with reports, financial health-checks, forecasts; 4. Recommending specific financial services products to the client, including an indication of the prices at which these can be arranged; 5. With the agreement of the client, contacting the product provider(s) on their behalf and acting between the provider and the client with a view to arranging the sale of the recommended financial services product(s); and 6. Where the client agrees to ongoing review services, monitoring their ongoing position on a periodic basis to ensure that the products continue to meet their requirements. If an adviser provides the services described under item 5 above in relation to a financial services product that is exempt from VAT, and the adviser can evidence this, the services set out under items 1 to 6 provided under the contract with the client will be VAT exempt. In this situation it doesn t matter whether the sale is finally concluded by the client, although in such circumstances it s advisable for the adviser to retain evidence that intermediation has taken place, such as a client's engagement letter, suitability report or any other client documentation. Do I need to do anything other than introduce the two parties to one another? There is an extra requirement other than merely introducing parties for some financial services, such as the issue, transfer, or receipt of money, credit, instalment credit-finance in relation to the purchase of goods (a detailed description of the services can be found below under VAT exempt supplies). In addition to the bringing two parties together, you must also complete work which is preparatory to the conclusion of contracts for the provision of those services, to qualify for the intermediary exemption. This means you must bring some expertise to the relationship, for example assisting in the negotiation of the key terms of the contract. It s important that you recognise the need for these extra steps when you re involved in these products, for example in arranging loans for your clients. What does not count as intermediary services? 4 In the situation where the adviser doesn t provide the arranging services, or if any of the services described above (services which qualify as intermediation) are contracted for and provided separately, the services will be subject to VAT as general advice.

Specifically excluded from the scope of intermediary services are market research, product design, advertising, promotional or similar services or the collection, collation and provision of information in connection with such activities. Therefore advertising a financial services provider s products in a general way will not count as intermediary services if, for example, somebody who viewed the advertisement then purchases a product, even if it is through you. However, sometimes these services can fall within the VAT exemption for intermediary services if they are ancillary to the main supply of intermediary services i.e. they are a minor part of the overall services provided. If this is the case, the whole service - ancillary and main supply - will be treated as one service and will be exempt. What is clear from the legislation, and the case-law surrounding it, is that whether an individual is acting as an intermediary will be decided on a case by case basis and will depend on the facts themselves. There is a flowchart below under Legislation and HMRC Guidance to help you decide whether the services fall within the intermediary exemption. What about advice that is not related to a product? Sometimes you ll provide advice that isn t related to the sale of a product, for example, on taxation or the establishment of trusts for existing investments. These are more likely to be subject to VAT in their own right, unless you can show that the advice given here is merely ancillary to a wider supply of exempt intermediary services, for example, because the advice is so minor or infrequent, or is subsumed into the wider provision of intermediary services. What if a client rejects or delays implementation? What if we follow the normal process and make recommendations to the client, which they either reject in full, and purchase nothing, or delay in implementing the recommendations. Can we still treat the service as exempt? As long as the intention of the client all along was to lead to a financial services product sale, then the fact that the sale doesn t go ahead, or is subsequently reneged, or is delayed prior to purchase, isn t enough to bring the supply outside the scope of the intermediary exemption. So long as the other requirements are met, the supply can continue to be treated as exempt from VAT. In such circumstances it s imperative that you retain evidence to show the intermediation undertaken e.g. meeting notes, correspondence, suitability reports etc. 5 Where the advice is given and the adviser is aware that the client is, for example, asking for general information, or, in relation to an investment that already exists, with no intention of buying new products, this is more likely to be subject to VAT.

What if the product element is only a minor part of the overall charge? Historically, there was a test of predominance in which an adviser was required to establish which element of their supply to a client (for example, advice, intermediation, reporting) formed the predominant element of the overall supply. The predominance test has since been removed in favour of an analysis of the process set out earlier in relation to services which qualify as intermediation. Therefore, even if most of the consideration relates to the advice element, as long as item 5, set out in relation to services which qualify as intermediation, is part of the services provided, the services will be exempt from VAT. However, this analysis is unlikely to apply if the client contracts separately for various elements of the service. In such a case, it s likely that each contracted service would have its own VAT liability, independently determined. However, the predominance test (usually referred to as the multiple/single supply test) is still of importance in determining the nature of the services provided. Where the advice directly results in the client taking out a financial services product (or if the client does not take out a product, it can be evidenced that the intention was always there to lead to a product sale) and all the requirements for intermediation are met, the whole supply will be exempt from VAT. In this specific situation the advice will be considered as ancillary to the principal supply of intermediation. However, if the main focus is the advice and this far outweighs the intermediary aspect of the services, the whole supply will be subject to VAT. In this situation the advice will be considered as principal supply and the intermediation is ancillary to the supply. What about ongoing services? Ongoing services, such as a review of the client's investments in order to ensure they still meet their requirements, can be treated as exempt from VAT, if they re provided under a contract that also included the VAT exempt arrangement services as described in item 5 in relation to services which qualify as intermediation. If the review services are provided under a separate contract from the original arrangement services, then the review services are likely to be subject to VAT. This will only be different if the new contract also includes arrangement type services as described in above in relation to services which qualify as intermediation. Please note that the VAT treatment described in this section does not cover discretionary management services, which are described in more detail in the next section. Care should be taken regarding on-going review and HMRC's attempts to categorise them as taxable management services. For example if the on-going services include a commitment to monitor and manage the investments (whether on a discretionary basis or not) it is likely that HMRC would view the on-going element as a separate taxable service. Additionally, it should be noted that HMRC have, in the past, taken the view that review meetings occurring more frequently than quarterly could indicate a taxable management service. 6

What about discretionary management services? HMRC has previously confirmed that the management of a Special Investment Fund (SIF) is exempt from VAT (the management of pooled investments within a fund structure). There are specific rules to determine whether a fund or investment vehicle qualifies as a SIF from a VAT perspective and whether management falls within the VAT exemption. Following EU case law, the characteristics of a SIF are as follows: They are solely funded (whether directly or indirectly) by persons to whom the benefit is to be paid (i.e. the clients); The clients bear the investment risk; The fund contains the pooled contributions of several clients; The risk born by the clients is spread over a range of investments. The above has not yet been directly enacted into UK law and there s still uncertainty in relation to the application of the VAT exemption on the management of a SIF in the UK. Portfolio management services that aren t considered to be VAT exempt fund management services are subject to VAT. VAT is therefore due on wealth management or private client management services, which refer to management of the investment portfolios of individual clients. Portfolio management services can be provided on a discretionary basis, where the client gives the manager the authorisation to act on their behalf and make investments (usually within a certain risk profile). In other situations there s an advisory based contract, where the manager advises the client, but the client makes the ultimate decision on the investments. In both situations the services provided by the managers will be subject to VAT. This will only be different where there s a specific transaction or execution only agreement, which in specific circumstances can be treated as exempt from VAT. Agreements consisting of a combination of transaction only and advice services will be subject to VAT. How do I show that the whole process was undertaken with a view to the sale of a financial services product? HMRC will expect an adviser to be able to evidence the reasoning behind the treatment of a particular supply of a service. The evidence will need to be specific to that client and that service, and in particular demonstrate that the adviser was in a position to act between the product provider and the client with a view to the sale of a financial services product. The evidence should relate to the intention of the client, not the adviser, in order for the services to qualify as VAT exempt intermediary services. 7 Although it s important that your client agreement correctly reflects the intermediation process, it won t be enough to solely refer HMRC to this or to rely on the wording of a contract as evidence that your treatment was exempt. Evidence has to exist to show that intermediation actually occurred. In particular, meeting notes and correspondence are useful indicators. Where a supply is treated as exempt from VAT, but the adviser is unable to evidence the reasons for this, there is the potential for HMRC to treat the supply as subject to VAT and

recover the VAT from the adviser. This may also lead to the imposition of penalties and interest and, depending on the contractual terms, may also lead to the adviser themselves being unable to pass the VAT charge onto the client. What if my services are predominantly exempt from VAT, do I still need to charge VAT on the services that are subject to VAT? When the taxable advice or service provided to a client is under your Sense Network authorisation, the simple answer is yes, you will need to charge VAT. As the principal regulated business, Sense Network is deemed to be the provider of these services. The Network is already VAT registered because taxable supplies exceed the registration threshold. When you deliver a taxable service (i.e. one which cannot be evidenced as falling under the intermediation exemption) under your Sense Network authorisation, your fee invoice should have VAT added at the standard rate, quote the Sense Network VAT registration number and instruct payment direct from the client to Sense. The Network will deal with VAT reporting and VAT payment in relation to these services. As a practical example, a client paying an invoice you have issued for 800 plus VAT will result in the network receiving 960. From this, 160 will be paid to HMRC by Sense, with 800 (less network charges) paid on to your AR firm. You must produce client invoices via Intelligent Office in all instances (see section below). It is the responsibility of the AR to ensure invoices are generated correctly. Any future VAT payments demanded of Sense Network by HMRC relating to mistakes or omissions will be reclaimed from the AR under the terms of the AR Agreement. If you are in any doubt please speak to us about the case before you issue your invoice. Your firm does not need to register for VAT unless its supply of taxable (non-exempt) services exceeds the VAT registration threshold (currently 85,000). Should your firm register for VAT it is important that you inform the Network immediately. For published HMRC guidance in this area please see the end of this guide. How does Intelligent Office VAT invoicing work? There is a Word version of an invoice including the Sense bank details; this is available in the fees tab as illustrated below. Select the relevant fee(s) and then click the Generate Fee Invoice button. If VAT is to be included this template includes Sense Network s VAT details and should be the version used. 8 You will then have the option to add details for inclusion in the invoice and a description (this

description is for internal use and does not appear in the invoice document). Click on the Create button. In the fee invoice tab, the Print/View button will now enable you to generate the Invoice template document. Use the Next button to select the options as appropriate to create your document. On the last page, we d recommend you use the default file type of Word rather than Pdf as this will enable you to edit the document where necessary. Click on the Finish button. You will then navigate to the Document Queue tab where you can open or download the document. Where possible you should use the Open button, this will allow you to automatically save any changes you make to the Document into io. If you use the Download option you will need to save and Upload to save changes to you document. For further help on using the document queue function within io please see the User Guide. 9

Client interactions different scenarios Initial general advice and information Where an adviser provides a client with initial advice such as a financial health check, this standalone advice will be subject to VAT at the standard rate. This will be the same in a situation where an initial fact finding meeting has taken place and the adviser decides to charge for this meeting, separate from any follow up services provided under a different agreement. Initial advice charged before the sale of a VAT exempt financial services product or client does not follow through with the sale Referring back to services which qualify as intermediation, in the situation where an adviser provides the following services to its client: Initial meeting and fact finding; Understanding the client's goals; Research and analysis; Obtaining tailored quotes from product providers; Providing these specific and price written tailored quotes to the client, and the client decides to wait to buy a VAT exempt financial services product or decides not to buy the product at all, the consideration charged to the client will still be exempt from VAT. The adviser has done everything to bring together two parties to enter into a contract for a specific VAT exempt financial services product, irrespective of whether the client follows through with the sale or not. The adviser will need to have evidence that intermediation has taken place, such as a client's engagement letter, suitability report or any other client documentation. Initial advice charged for an exempt financial services product sale If the adviser provides the exact same services described in the previous section above and the client decides to follow through with buying an exempt financial services product, the consideration charged to the client will be exempt from VAT as this service constitutes intermediation. The adviser will need to have evidence that intermediation has taken place, such as a client's engagement letter, suitability report or any other client documentation. Ongoing services arranged at the time of the initial exempt product sale 10 When the ongoing services form part of the agreement for the initial VAT exempt financial services product sale (which qualifies as an intermediation service), from a VAT perspective this would be considered to be a single supply of VAT exempt intermediation. This doesn t change if the client has the option to choose not to receive the ongoing services before they are actually performed.

The adviser will need to have evidence that intermediation has taken place, such as a client's engagement letter, suitability report or any other client documentation. Note also the earlier comments regarding on-going services and management services. Ongoing services arranged separately When ongoing services are arranged separately, the VAT treatment of the services provided under the separate agreement will need to be assessed in their own right. These ongoing services could be exempt from VAT, if the intermediation conditions under services which qualify as intermediation are met. Execution only services In certain situations an adviser only provides execution only services. The client has already decided what financial services products to purchase and the adviser will facilitate the transaction. No suitability advice is given and no ongoing services will be provided. If the transactions concern the VAT exempt financial services products (such as securities and fund units etc.) within the VAT exempt supplies under the Value Added Tax Act 1994, Schedule 9, group 5, the execution services will be exempt from VAT. Frequently asked questions Not all the advice we give leads to a sale sometimes the client refuses or reneges on the sale. Does this make it subject to VAT? If at all stages the intention of the client is to purchase a VAT exempt financial services product and you can provide evidence of this, the service can be considered as exempt from VAT regardless of whether a sale was actually concluded. Please refer to earlier sections on services which qualify as intermediation, actions other than introducing parties and what doesn't count as intermediary services for more details. If most of the fee relates to the advice, will the service still be exempt if there is only a minor element of rebalancing or fund switching? The previous test which was based on predominance has been removed from HMRC guidance in favour of an analysis of the process set out in above in relation to services which qualify as intermediation. In particular, the activity at item 5 is key to intermediation. Therefore, even in the situation where most of the fee relates to the advice element, the services will be exempt from VAT if it qualifies as an intermediation service. 11 Please note that the actual services will still need to be analysed to determine the nature of the supply. If the principal supply is advice and intermediation is merely ancillary to this advice, the whole supply will be taxable for VAT purposes. Please refer to the section above re where a product is a minor part of the charge for more details.

What if advice does not lead to the immediate sale of a product, but at a later date the client instructs us to purchase one? If at all stages during the initial advice the intention of the client is to purchase a VAT exempt financial product and you can provide evidence of intermediation, the advice can be considered as exempt from VAT, even if it does not lead to a sale at the present time. Where a client instructs you to purchase the product at a later date, this will also be exempt from VAT as you will still be acting in an intermediary capacity. Please refer to services which qualify as intermediation, paragraph 2 sets out specific examples of transactions. What if the client has an ongoing relationship but makes no changes on the basis of our advice i.e. no VAT exempt financial services product is sold. Can this still be exempt? If this ongoing review process was included as part of the initial general contract, and the contract includes item 5 (from services which qualify as intermediation above), rather than being contracted for after the advice has been given and products purchased, the ongoing services can be treated as exempt from VAT. Please refer above to client not proceeding for more details. What if we take over an existing portfolio? The same general rules will apply and relevant sections from the general guidance should be consulted to determine whether the service qualifies as intermediary or not. If not, then the charges will be taxable. What is the VAT liability of advice to corporate clients to set up group protection arrangements e.g. group death in service or group PMI? As set out in the general guidance above, in principle all services will be subject to VAT unless a specific exemption is applicable. If in this situation the adviser provides general advice, without acting as an intermediary (doing everything to bring together two parties with the view to creating a contract regarding the provision of VAT exempt financial services), then this would be considered to be subject to VAT. If the adviser acts as an intermediary for an insurance or financial transaction, this could potentially be exempt from VAT (please see relevant sections under general guidance above on how to determine whether the service qualifies as an intermediation service). If HMRC query a particular treatment of a supply, how do I demonstrate that it was correctly exempt? 12 You will need to provide evidence that intermediation actually occurred, or that it was always the intention of the client for it to occur.

It will not be enough to refer HMRC to your usual terms of business or to rely on the wording of a contract. The evidence will be specific to each particular case. Please refer to section above on showing that the process was undertaken with a view to the sale of a product. 13

Legislation and HMRC guidance Do my services fall within the intermediary exemption? VAT exempt supplies added tax The following supplies are exempt from VAT under the Value Added Tax Act 1994, schedule 9, group 5. The law also allows intermediary services in providing these to be exempt: 14 Item 1: the issue, transfer or receipt of, or any dealing with, money, any security for money or any note or order for the payment of money Item 2: the making of any advance or the granting of any credit Item 2A: the management of credit by the person granting it

Item 3: the provision of the facility of instalment credit finance in a hire-purchase, conditional sale or credit sale agreement for which facility a separate charge is made and disclosed to the recipient of the supply of goods Item 4: the provision of administrative arrangements and documentation and the transfer of title to the goods in connection with the supply described in item 3 if the total consideration therefore is specified in the agreement and does not exceed 10 Item 5: the provision of intermediary services in relation to any transaction comprised in item 1, 2, 3, 4 or 6 (whether or not any such transaction is finally concluded) by a person acting in an intermediary capacity Notes For the purposes of item 5, intermediary services consist of bringing together, with a view to the provision of financial services: a. Persons who are or may be seeking to receive financial services, and b. Persons who provide financial services, together with (in the case of financial services falling within item 1, 2, 3 or 4) the performance of work preparatory to the conclusion of contracts for the provision of those financial services, but do not include the supply of any market research, product design, advertising, promotional or similar services or the collection, collation and provision of information in connection with such activities 15 Item 5A: the underwriting of an issue within item 1 or any transaction within item 6 Item 6: the issue, transfer or receipt of, or any dealing with, any security or secondary security being: a. Shares, stocks, bonds, notes (other than promissory notes), debentures, debenture stock or shares in an oil royalty; or b. Any document relating to money, in any currency, which has been deposited with the issuer or some other person, being a document which recognises an obligation to pay a stated amount to bearer or to order, with or without interest, and being a document by the delivery of which, with or without endorsement, the right to receive that stated amount, with or without interest, is transferable; or c. Any bill, note or other obligation of the Treasury or of a Government in any part of the world, being a document by the delivery of which, with or without endorsement, title is transferable, and not being an obligation which is or has been legal tender in any part of the world; or d. Any letter of allotment or rights, any warrant conferring an option to acquire a security included in this item, any renounceable or scrip certificates, rights coupons, coupons representing dividends or interest on such a security, bond mandates or other documents conferring or containing evidence of title to or rights in respect of such a security; or e. Units or other documents conferring rights under any trust established for the purpose, or having the effect of providing, for persons having funds available for investment, facilities for the participation by them as beneficiaries under the trust, in any profits or income arising from the acquisition, holding, management or disposal of any property whatsoever. Item 8: the operation of any current, deposit or savings account

Item 9: the management of: a. An authorised open-ended investment company; or b. An authorised contractual scheme; or c. An authorised unit trust scheme; or d. A Gibraltar collective investment scheme that is not an umbrella scheme; or e. A sub-fund of any other Gibraltar collective investment scheme; or f. An individually recognised overseas scheme that is not an umbrella scheme; or g. A sub-fund of any other individually recognised overseas scheme; or h. A recognised collective investment scheme authorised in a designated country or territory that is not an umbrella scheme; or i. A sub-fund of any other recognised collective investment scheme authorised in a designated country or territory; or j. A recognised collective investment scheme constituted in another EEA state that is not an umbrella scheme; or k. A sub-fund of any other recognised collective investment scheme constituted in another EEA state. Item 10: the management of a closed-ended collective investment undertaking Extract from HMRC Notice 701/49 (January 2013): Finance 9.10 IFA Networks This paragraph applies to circumstances where IFA firms operate as networks through agreements with persons known as appointed representatives (ARs) for whom the authorised IFA firm takes regulatory responsibility. These arrangements enable the AR to carry out regulated activities without the need to be authorised directly by the Financial Services Authority (FSA). These network arrangements are permitted under UK legislation and are subject to strict regulatory rules. In particular, the following should apply: 16 the network appoints the ARs and trains them to operate in accordance with FSA requirements in all dealings with the client the ARs make it clear, both orally and on any paperwork, that they are acting on behalf of the network the network has the contractual relationship with the financial product providers and at all times the AR acts on the network s behalf the network maintains a high level of control over the ARs, carrying out regular checks and audits and imposing sanctions where appropriate the network accepts responsibility for the actions of the ARs and handles all customer complaints the network holds liability insurance to cover any claims resulting from the activities of the ARs and is legally liable for any sanctions imposed under the Financial Services and Markets Act 2000 all fees or commissions for regulated activities are paid by the clients or product providers to the network and these form part of the income of the network for accounting and direct tax purposes, and the network pays the ARs for their services and these payments can be adjusted at the discretion of the network should, for example, the AR be found to have failed to conduct the business in accordance with the regulatory requirements.

When networks operate in this way, in effect a sub-agency or sub-contract arrangement exists between the network and the ARs. The network acts as principal, making supplies of financial intermediary services to the financial product providers and of advice and/or financial intermediary services to the clients. The networks effectively sub-contract their functions to the ARs who interact directly with the client and the product providers in the provision of individual supplies on behalf of the network. This means that: all payments (whether by fee or commission) received from the product providers or clients for the supplies of financial intermediary services provided via the ARs is the network s VAT exempt income and the onward payments made to the ARs is consideration for the AR s VAT exempt intermediary services supplied to the network fees either paid directly to the network or via the ARs, in respect of advice only services supplied via the ARs (which fall outside the exemption for financial intermediary services) is the network s standard rated income. Any onward payments made to the ARs is consideration for the provision of those services by the ARs to the network on which VAT will be due if the AR s taxable income is above the VAT registration threshold any optional services supplied by the network to their ARs for additional consideration (such as specific compliance or I.T. services) will be separate supplies and the relevant VAT liability will apply, and any non-regulated services provided by ARs fall outside the network arrangements altogether and are made directly by the IFA to the client/product provider. This VAT treatment will not apply to supplies made by networks that do not operate in the way outlined above (for example, firms, which on first appearance look like networks, but are not authorised entities and are set up to provide marketing and/or compliance support services to directly authorised IFA firms). 17