Appointed Representatives - The FCA speaks

Last week's publication by the FCA on its thematic review of Appointed Representatives (ARs) has been much commented upon in the trade press this week.

Whilst some of the findings were of greater relevance to firms with large numbers of ARs who were not 'insurance people', the underlying message contained reminders of the responsibilities that firms take on when appointing any ARs.

The FCA will be writing what they call a 'Dear CEO' letter to all firms with ARs reminding them of their duties.

Bear in mind that if you have an AR, your firm is responsible to the FCA for any regulatory failings that might occur, so such arrangements should not be entered into lightly.

It all starts with robust due diligence and if you are happy to proceed, then an AR Agreement, which is a contract between the two firms, is required. You can draw down a template for guidance from the RWA online library, but you should seek legal advice to ensure that this is suitable for your specific needs.

Do not forget the need to have an Approved Person at the AR if they are a limited company or partnership. This is frequently overlooked.

You must have robust systems and controls with formal monitoring plans to demonstrate how you are managing the risk.

A good way to view an AR is to treat it as a branch office of your own firm, ensuring that all regulatory matters are covered and importantly, all staff are assessed as competent (by you) to carry out their duties. You can use the RWA Development Zone as a part of this which many of you with ARs are already doing.

If you have ARs, or are considering appointing any, please take the time to read the FCA report. You can find it here.

Whilst this focuses on the AR, there are valuable lessons that can also be applied to those firms with Introducer Appointed Representatives (IARs).

 

As ever, if you are in any doubt, or worried about any AR relationship you might have, speak to your RWA business manager. We are here to help.

About the author

Ian started his career as an insurer spending 12 years in various sales and development roles. He then founded a general and life insurance brokerage which became one of Southampton’s leading firms before its sale to what is now Bluefin, in 2000. At the date of sale, the company had grown to employ 36 staff. In 2002 he joined Robin Wood in incorporating the firm which has now evolved into the current RWA business.As former Managing Director of a mid range broking firm, he has the ability to both empathise with owner/managers and also to recognise the dangers that a firm can face, should it fail to embrace high standards of compliance and professionalism. His vast knowledge of the insurance business and the connections with senior people in all areas, positions him well to assist firms of all types and disciplines with their regulatory and business consultancy needs. Ian was an elected Council Member of the Insurance Brokers Registration Council (IBRC) from 1994 until its dissolution in 1999. The IBRC was the forerunner to the GISC which was ultimately replaced by the FSA, now the FCA, and so his appreciation of Regulation spans over 20 years.Ian is ACII qualified by examination.Ian is a past President of the Insurance Institute of Southampton (2000/2001) and remains an active member of Council. In 2014 he was invited to become a Vice President of the Insurance Institute (the national body) and as such, will represent the National President as and when required at formal events. Ian is also a Freeman of the Worshipful Company of Insurers.He is a contributor to the insurance press and a regular speaker at insurance events.

Ian Ritchie

Get RWA Insight In Your Inbox

Regular business news and commentary delivered direct to your inbox each week. Sign up here