Appointed Representative and Principal Regime Review

Review of the use of the Appointed Representatives’ (AR) regime is a priority for the FCA.  The FCA has noticed an increased level of harm across all the sectors where firms have ARs and is preparing certain actions in the coming months to address this.

Upcoming FCA key milestones for the AR regime:

  • ‘Act now’ survey on ARs to be completed by 17th December 2021
  • FCA Consultation Paper planned for November 2021
  • HMT Call for Evidence planning for November 2021
  • Policy Statement by the FCA planned for Q2 2022

 

Appointed Representatives Survey – what to expect

The survey is being sent out to principal firms across the relevant financial markets, in relation to their ARs. The data collected will be used to inform FCA policy development for the future and will support their supervisory work on ARs.

What do principal firms have to do?

  • Provide information about the firm’s ARs and about the firm’s own business in relation to ARs
  • Provide information on the ARs’ activities, any complaints against the ARs and the revenue of ARs

All information requested in the survey must be provided. Response is mandatory and must be submitted by the 17th of December 2021.

Survey links:

FCA survey on principal firms and ARs (PDF)

FCA survey on principal firms and ARs (online)

 

FCA Approach – key milestones and what to expect

The November 2021 Regulatory Initiatives Grid flagged a set of FCA actions concerning AR structures. A new consultation paper is expected in November 2021, with a focus on policy proposals regarding its rules for principals with ARs. Also, a HMT Call for Evidence is scheduled for the same month, which will collect views on the overall aim, scope, benefits and risks on from the current AR regime. Following that, the FCA will issue a Policy Statement in Q2 2022.

We are expecting changes in the FCA’s approach to the use of the AR regime to:

  • Require more timely information on principals and their ARs
  • Improve ongoing oversight and due diligence of current and prospective ARs
  • Increase supervision to reduce the most significant risks from principals and ARs
  • Strengthen and improve the rules governing the AR regime
  • Increase scrutiny on high-risk principals and on firms in the process of appointing ARs

Whatever the FCA proposes, we are expecting the AR regime to become tougher for principal firms.  Whether this is in the onboarding of new ARs or the ongoing monitoring of existing ARs, the FCA will expect far higher standards in the future.  This is also allied to the FCA’s push on regulatory hosting firms and the drive to ensure that all permissions that a firm has are used by the firm itself, not just by its ARs.   FCA expectations for firms are increasing and must be met.

 

How can Complyport help?

If this information has raised any questions or you think your firm may require assistance in completing the questionnaire or complying with the forthcoming policy proposals on the AR regime, please contact Jonathan Greenstein now, via jonathan.greenstein@complyport.com, and book in a free consultation.

Our teams are ready to support your firm in assessing your AR structure, reviewing supervision and oversight provisions, terminating AR arrangements and more.

 

About Complyport

Complyport is the City’s market leading consulting firm supporting the UK financial services industry for over 20 years. We specialise in providing Governance, Risk and Compliance services to support the regulated financial services industry to raise standards and thrive.

Complyport advises and assists firms to become authorised and to comply with the rules and requirements of regulators on an ongoing basis. Our vision is to be there for our clients every step of the way, helping them change, grow, and excel through expertise, insight, and innovation, and in so doing to become our clients’ most valued supplier and trusted advisor.

We have successfully assisted over 1000 firms to become authorised with the FCA and EU and are providing regulatory support to over 600 regulated firms on an ongoing basis globally. With presence in the UK and EU, as well as via our Associates Network, Complyport can assist firms across multiple jurisdictions.

Complyport’s multidisciplinary consultants possess deep expertise in their field, having acted in FCA skilled person reviews, as expert witnesses in legal cases and as expert investigators for firms or their legal advisers.

Day to day, we conduct audits and reviews of a firm’s products, processes, policies, and procedures to identify scope for business, to determine the impact of regulatory developments and to verify compliance with local regulations. Our clients tell us we live our values; we are driven, agile and collaborative.