FCA publishes webpage for Principal Firms with OARs

The FCA has published a page ‘Information for Principals with Overseas Appointed Representatives’ containing information outlining additional challenges Principles may face and expectations and practical considerations for OAR oversight. 

Feedback to the FCA’s consultation on improving the Appointed Representatives regime noted that Principal firms may encounter challenges when overseeing and communicating effectively with their OARs due to differing legal, accounting, and regulatory requirements for each jurisdiction, geographical distance, and cultural and language variations. The regulator commented on this its Consultation and subsequent Policy Statement.

The new web page seeks to prevent harm arising from the use of OARs, and sets out the FCA’s expectation that Principals:

• Consider whether customers dealing with an OAR service will receive the same levels of service, protections, and outcomes as those dealing with UK-based appointed representatives (ARs), and if not, ensure customers are given suitable information to alert them to any differences.
• Establish on reasonable grounds, and on a continuing basis, that the activities of their OARs do not result in undue risk of harm to consumers or market integrity.

The FCA also called on Principals to make the following practical considerations:

• When completing the annual self-assessment document, consider the additional risks of having OARs when assessing controls and resources (as per SUP 12.4.2(3)).
• The application of the approved persons regime to OARs (including individuals within OARs performing a customer function) depends on, among other things, whether activities are carried on from an establishment in the UK and how long individuals performing a customer function spend in the UK annually (See SUP 10A for more information).
• Principals should ensure that AR agreements require OARs to comply with relevant rules (SUP 12.5.5R and, for example, the communication requirements set out in GEN 4.4.1R).

The regulator reiterated that if a firm cannot adequately monitor the activities of an OAR, or the OAR does not carry-on regulated activity in the UK, the firm should consider terminating the agreement. It emphasised that data would inform future targeted supervisory engagement, should it highlight harm related to principals and OARs.

Additional Support 

For firms looking for additional support and guidance in ensuring their monitoring and oversight of OARs remains compliant, or in completing related risk assessments, get in touch with UKGI Compliance: info@ukgigroup.com.

If you are already a Development Zone user, you can find courses related to topics we have touched on in this article, including:

'Overseas and Unrated Insurers and Insurance Broking'