Principals who have Appointed Representatives

Of relevance to: All Principals who have Appointed Representatives (ARs) or Introducer Appointed Representatives (IARs), regardless of sector

Having issued an alert in August 2016 which highlighted some of the risks arising from authorised firms accepting business from unauthorised introducers/lead generators and/or other authorised firms, the FCA has issued a second alert expanding on this subject, particularly highlighting the risks to a Principal of not having adequate oversight of its Appointed Representatives (“ARs”).

This follows an increase in cases of introducers having an inappropriate influence on business carried out by authorised firms.

Principals are responsible for the regulated activities of their ARs and the FCA expects them to consider certain risks and act upon them where relevant:

  • introducers’ influence:
    review the introducer relationships you and your ARs have to determine if your firm is under undue influence;
  • AR activities:
    review your AR relationships to ensure they remain necessary, appropriate and relevant for your type of business;
  • failure to identify:
    review your processes in relation to persons with significant control and senior management responsibilities/functions within your ARs;
  • monitoring and due diligence:
    review whether your AR and introducer due diligence and monitoring processes are adequate;
  • check your ARs:
    review whether you need to take any additional steps to ensure the actions of your ARs are compatible with their obligations as an AR and allow you to meet your regulatory responsibilities; and
  • review and consider:
    re-read the alert issued on 2 August 2016.
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