(1)This section applies to an agreement that—
(a)
is made by an authorised person (“the provider”) in the course of carrying on a regulated activity,
(b)is not made in contravention of the general prohibition,
(c)if it relates to a credit-related regulated activity, is not made in contravention of section 20, and
(d)
is made in consequence of something said or done by another person (“the third party”) in the course of—
(i)a regulated activity carried on by the third party in contravention of the general prohibition, or
(ii)a credit-related regulated activity carried on by the third party in contravention of section 20.
(1ZA)But this section does not apply to a regulated credit agreement or a regulated consumer hire agreement unless the provider knows before the agreement is made that the third party had some involvement in the making of the agreement or matters preparatory to its making.
(1A) An agreement to which this section applies is unenforceable against the other party.
(2)The other party is entitled to recover—
(a)any money or other property paid or transferred by him under the agreement; and
(b)compensation for any loss sustained by him as a result of having parted with it.
(3) “Agreement” means an agreement—
(a)made after this section comes into force; and
(b)the making or performance of which constitutes, or is part of, the regulated activity in question carried on by the provider.
(4)This section does not apply if the regulated activity is accepting deposits.
(5)For the purposes of subsection (1ZA)—
“regulated consumer hire agreement” has the meaning given by article 60N of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001
( S.I. 2001/544);
“regulated credit agreement” has the meaning given by article 60B of that Order.
Cases considering section 27 (12)
[2021] EWCA Civ 474 · 1 April 2021
An authorised provider’s agreement was made in consequence of an unauthorised intermediary’s regulated advice and arrangements. It was therefore unenforceable, and the consumer was entitled to recover transferred money and property, subject to section 28 (see paras [103]-[106]; [117]).
[2026] EWHC 2337 (Admin) · 11 September 2026Interprets
The court construed section 27 as a coherent statutory scheme identifying qualifying agreements and providing one cause of action with several remedies. (see paras [39]-[51]; [91]-[108])
The qualifying agreement and unauthorised third-party activity supplied the statutory conditions for the cause of action; accrual followed when the transfer was made. (see paras [39]-[45]; [103]-[108])
The unenforceability remedy could arise when the agreement was made, but its separate treatment did not imply that section 27(2) contained separate causes of action. (see paras [41]; [54]-[55]; [88])
Section 27(2) creates a single cause of action. Its recovery and compensation provisions are remedies within that cause, accruing on transfer rather than on later quantification of loss. (see paras [46]-[51]; [103]-[108])
Recovery of money or property transferred under the agreement forms part of the single statutory cause of action and is subject to the same accrual analysis. (see paras [39]-[51]; [103]-[106])
Compensation for loss resulting from the transfer forms part of the same cause of action. Loss may occur upon transfer and the remedy may include later additional loss, subject to avoiding double recovery. (see paras [128]-[140]; [170]-[174])
[2024] EWHC 3374 (Admin) · 31 December 2024
Treats section 27 liability as the legal issue affected by the Court of Appeal’s decision and the FSCS’s subsequent policy. The claimants’ appeals sought additional compensation on that basis, but the court dismissed the judicial review claim as an out-of-time collateral challenge. (see paras [4]-[8]; [69]-[78]; [94]-[95])
What each judgment says about section 27 is in the case-law panel in the full Act.
72.Under this section, agreements made by an authorised person in the course of his authorised business may also be unenforceable by that person if the agreement was entered into as a result of a third party’s unauthorised regulated activities. This might arise if, for example, a contract was entered into as a result of investment advice given by an unauthorised third party.