FCA confirms new rules for firms with Appointed Representatives (ARs).

Last week (03/08/2022), the FCA confirmed new rules to make authorised firms take more responsibility for the oversight of their Appointed Representatives (ARs).

Appointed Representatives are not directly authorised by the FCA, it is the Principal Firms’ obligation to ensure that their ARs maintain regulatory compliance. The FCA has stated that, whilst some firms are already doing this effectively, there are still improvements that can be made to increase consumer protection and avoid products being mis-sold or consumers being misled.

Under these new rules, Principal Firms will need to:

  • Apply enhanced oversight of their ARs, including ensuring they have adequate systems, controls, and resources.
  • Assess and monitor the risk that their ARs pose to consumers and markets, providing similar oversight as they would to their own business.
  • Review information on their ARs’ activities, business, and senior management annually, and be clear on the circumstances when they should terminate an AR relationship. This calls for firms to complete a self-assessment document demonstrating how they meet policy requirements.
  • Notify the FCA of future AR appointments 30 calendar days before they take effect.
  • Provide complaints and revenue information for each AR to the FCA on an annual basis.

Key outcomes following the implementation of these rules is to provide additional clarity on principal’s responsibilities and expectations in relation to ARs, which should in turn create stronger and better oversight needed to prevent harm to consumers. It is expected that Principals will be able to address problems with ARs that are, or have the potential to, cause harm to consumers or markets, and that consumers will have better access to information that will help them make informed decisions when choosing a product or service.

In addition to this, the FCA is also undertaking ‘targeted supervision’ of principal firms, across the whole financial services sector, as part of its thee-year strategy to improve outcomes for consumers and markets. It is also increasing scrutiny on firms applying for authorisation and as they appoint ARs.

Principals remain responsible for the activities of their ARs; the implementation of the new rules does not change this fact. The FCA also explained that it is working with Her Majesty’s Treasury “to explore if further changes are needed to the AR Regime, which would require future legislative change”.

The changes will take effect on the 8th December 2022 following a four-month implementation period.

If you would like more information about this, please contact your RWA Business Manager or get in touch via email at helpdesk@rwagroup.co.uk or call 01604 709509.

About the author

Jessica joined RWA in 2018, having graduated with a First Class Honours degree in Film Studies. Her role as a content designer involves developing new and engaging e-learning modules as well as assisting in the creation of articles for Insight. 

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