FCA Consulting on Improvements to the Appointed Representatives Regime

The FCA is consulting on proposed improvements to the Appointed Representatives (ARs) regime which would see stronger oversight of ARs.

An AR is defined as a firm or person who carries on a regulated activity on behalf, and under the responsibility of, an FCA authorised firm (known as ‘the principal’). The principal assumes responsibility for the regulated activities the AR carries out.

However, the FCA has stated that it has seen a wide range of harm across firms who have ARs. This, it says, is due to insufficient due diligence before appointing the AR or inadequate oversight after the AR has been appointed.

The regulator’s proposed changes would address the harm arising “while retaining the cost, competition and innovation benefits the AR model can provide”. The proposals would seek to improve principals’ oversight of ARs and require principals to provide the FCA with more information on their ARs.

Executive Director for Consumers and Competition at the FCA, Sheldon Mills, said, “The appointed representative model helps bring choices to consumers, but the level of harm we are currently seeing is too high. There are real risks of consumers being misled and mis-sold with little scope for recourse.

“We have already started work looking at high risk ARs and these proposals build on that work. We want to ensure that principals are properly overseeing their appointed representatives, ensuring they are competent, financially stable and delivering fair outcomes for consumers.”

The consultation paper (CP21/34: Improving the Appointed Representatives regime) outlines the FCA’s proposed changes to the regime. The consultation closes on 3 March 2022. Comments can be submitted via online response form, email cp21-34@fca.org.uk or in writing to Governance & Professionalism Policy, Financial Conduct Authority, 12 Endeavour Square, London E20 1JN.

The FCA will review the feedback to the consultation and a follow-up Policy Statement and final rules are expected in H1 2022.

If you need any advice on this or other compliance issues, please contact your RWA Business Manager or email helpdesk@rwagroup.co.uk.

About the author

Kirk joined RWA in 2015, having worked in the financial services sector for many years. He started out in both the general insurance and mortgage advice arms of HSBC, before becoming the Compliance Officer at Go Compare and Training & Competence Manager at Optimum Credit. 

At RWA, Kirk is Deputy Head of Compliance. He supports RWA clients by looking after their compliance, training and competence needs and keeping them up to date with regulatory changes. He promotes the achievement of fair customer outcomes and specialises in designing and implementing T&C schemes for firms of all sizes.

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