Authorisations and ARs under the IDD

Here are two little-known changes regarding Authorisations and ARs under the Insurance Distribution Directive (IDD):

Authorisations

As we know, the FCA has a time scale of six months from the date an application for a new firm authorisation is received, to give a decision.

The FCA has advised that the authorisation process will remain largely the same under the IDD but that the Regulator will now be required to deal with a complete application within three months instead of the current six-month timescale.

This will bring the timescales into line with other areas, such as Change In Control, and will be a welcome benefit to new start-ups or firms moving from Appointed Representative status to directly authorised.

Appointed Representatives (AR)

The FCA is also amending the requirements regarding the obligations of principal firms when taking on any AR.

The FCA Handbook (Sup 12 for those keen readers) will be updated to include a requirement on the principal firm to collect some new information from the AR in accordance with the requirements of the IDD. This affects the relationship between the principal and AR rather than any notifications that need to be made to the FCA.

The new requirements include:

  • Ensuring that the AR establishes, maintains and keeps appropriate records to demonstrate compliance with the good repute requirements
  • Gathering identities of shareholders with more than a 10% holding in the AR and any persons with close links. The principal firm should establish that those with holdings of more than 10% and close links do not prevent the effective supervision of the firm
  • The requirement that the AR informs the principal of any changes to the information gathered from the AR in relation to shareholdings and close links.

So, for those firms with ARs, it is important that they address these issues and build these additional requirements into their formal annual monitoring plan and gather evidence that these are being complied with.

For further information, please contact the team at RWA.

About the author

Terence is the Chairman and Compliance Director at RWA. He has over 35 years' experience in the Financial Services environment, covering general insurance, investments and mortgages. Before joining RWA, Terence worked for a large PLC insurance brokerage in Manchester, overseeing some 20 acquisitions. He was made a Director of RWA in 2011 and has worked with insurance broking firms of all sizes across the UK. He has a particular interest in Financial Crime and the protecting the insurance broker. Terence is also Executive Chairman of the Association of Professional Compliance Consultants (APCC), the professional body for the compliance consultancy sector.

Terence Clark

Get RWA Insight In Your Inbox

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