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6 December 2021

On 3rd of December, the Financial Conduct Authority (“FCA”) published their eagerly anticipated consultation aimed at improving the appointed representatives (“AR”) regime.

The AR regime was created to allow self-employed representatives to engage in regulated activities without having to be authorised. Over time, it has evolved to include a wider range of business models across sectors and markets. The AR regime places the responsibility of ensuring that ARs do not cause consumer harm to the directly authorised firm known as a Principal. The FCA believe that much of the consumer harm being caused by the AR regime is due to the lack of due diligence and ongoing monitoring a Principal firmĀ  undertakes on its ARs.

The Consultation Paper CP21/34: Improving the Appointed Representatives regime aims to address the harms which the FCA have observed with in all markets where ARs operate. Some of the proposed measures for which the FCA are seeking consultation include;

  • Notification of an appointment of an AR should be made a minimum of 60 days before the appointment takes place.
  • More detailed information about regulated and non-regulated business of ARs (including the reason for the appointment of the AR and how this relates to the Principal’s business) to be provided as part of the notification process.
  • Further reporting requirements including
    • Complaints data reported annual per each AR and not as an aggregate figure as is currently the case.
    • Financial information relating to regulated and non-regulated turnover by AR not as an aggregate figure as is currently the case.
  • Principals to take responsibility for attesting their AR’s details. Current directly authorised firms must attest their details through the FCA Connect portal every 12 months within 60 days of their Account Reference Date.
  • Further information about the relationship between a Principal and its ARs will appear on the Financial Service Register such asĀ  the activities A Principal permits the AR to undertake.

The Regulator is proposing that Principal firms will be given a timeframe in which to submit the enhanced information to the regulator as well as ensuring that this is provided for any subsequent ARs which it may appoint.

Feedback to the consultation is due by 3rd of March 2022. Feedback can be provided by completing the online response form, emailing cp21-34@fca.org.uk or writing to Governance & Professionalism Policy, Financial Conduct Authority, 12 Endeavour Square, London E20 1JN.

By Ian Beardmore

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