Appointed Representatives (ARs) - Complying with Regulatory Obligations

Whilst I do have better things to do in my private life, I was recently drawn to an FCA publication which followed their investigation into how principal firms within the investment management sector understand and comply with their regulatory obligations in respect of appointed representatives (ARs).

Now you might be wondering why I’m drawing to your attention the significant shortcomings in the governance and control [of ARs] of our compatriots on the other side of the advisory fence? Well, it reminded me of the ‘kicking’ the GI sector received from the regulator on this very issue back in 2016 when the FCA published the results of their investigation TR16/6: Principals and their appointed representatives in the general insurance sector.

What I found interesting was that the FCA has now conducted two detailed and costly investigatory exercises across both sectors on an issue common to both and in respect of which they [the FCA] feel that the whole area of principal/appointed representative relationships carry significant risk of customer and market harm. Indeed, the FCA has issued a ‘Dear CEO’ letter setting out their concerns and expectations as they did in 2016. They then issued an alert in 2017.

There’s no doubt that this is high on the FCA’s focus going forward. Indeed, they’ve already intervened in relation to a number of firms involved in this recent piece of work.

So what’s our message?

Simple: to be fore-warned is to be fore-armed.

If you have only one AR then you must:

  • appreciate the impact to your business of appointing AR(s);
  • and effectively oversee and supervise them.

Naturally RWA is here to help so please contact your Business Manager who will be happy to guide you.

About the author

Bruce has worked in financial services for the whole of his professional life, including 11 years as a Compliance Director of a US owned Independent Financial Advisory and Wealth Management business. At RWA, Bruce leads the Audit and Conduct Risk department from our Manchester office. He is RWA's lead consultant to the Guernsey Financial Services Commission (GFSC).

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