New FCA Rules to Tighten up the Appointed Representatives Regime with PS22/11

A press release issued by the FCA this week confirms the introduction of new rules to improve the oversight of the Appointed Representatives regime. These rules, issued within PS22/11: Improvements to the Appointed Representatives regime, are aimed at addressing the FCA’s perceived significant shortcomings amongst Principal firms in the current regime, including insufficient oversight of their Appointed Representatives (AR) and inadequate systems and controls over the regulated activities they are responsible for.

For more information and background on the Appointed Representatives, have a look at our articles on the supervision of Appointed Representatives as the Principal firm and an Appointed Representative and Principal Regime Review.

PS22/11 – What are the FCA’s goals:

The main goals of the FCA revolve around two main points highlighted in the Consultation Paper on the Appointed Representatives Regime, which was issued late last year:

  • To collect additional information on ARs and strengthen reporting requirements for principals, and
  • To clarify and strengthen the responsibilities and expectations of principal firms

In addition, the FCA strongly believes that the rules will, amongst other goals, help prevent misconduct by ARs which as a result serve to undermine the safe and fair operation of markets. Principal firms will have heightened obligations, and will be required to:

  • Apply enhanced oversight of their ARs
  • Appropriately assess and monitor consumer and market risk of their ARs
  • Annually review information on their ARs’ activities and understand the circumstances where they should terminate an AR relationship
  • Notify the FCA of future AR appointments in the allocated period before the relationship takes effect
  • Provide an annual update on complaints and revenue information for each AR to the FCA

Ultimately, the FCA wants principals to do a better job of overseeing the appointed representatives they appoint and to provide the FCA with more regular data to help identify and tackle harm earlier. To achieve these aims, the FCA has published final rules on AR data and notification requirements, with notable differences for Introducer Appointed Representative firms (IAR) and ARs. These changes will take effect on 8th December 2022.

Who is affected:

Firms affected by this PS22/11:

  • All firms that currently have ARs (principal firms)
  • Firms with the intention of having ARs in the future
  • Appointed Representatives themselves

Next steps:

Following this Policy Statement, the FCA is introducing a four-month implementation period before the changes take effect. The FCA expects firm to be aware of the updates in its rules and expectations and take all necessary steps to ensure they comply. Further:

  • Principal firms should expect to receive a section 165 data request from the FCA later this year
  • The changes will take effect 8 December 2022
  • The Treasury is currently analysing the responses to its Call for Evidence and will set out next steps on its review of the AR regime in due course.

How can Complyport Help?

If this article has raised any questions about the upcoming Section 165 data request later this year, or if these changes to the Appointed Representatives regimes affect your firm, or you think your firm may require assistance understanding and/or complying with the updated rules and expectations of the FCA, please contact Jonathan Greenstein via jonathan.greenstein@complyport.com to book in a free consultation.

About Complyport

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