Summary of Appointed Representatives Consultations – CP21/34

The FCA have recently published CP21/34, a consultation paper which outlines their proposed changes to the Appointed Representatives (AR) regime and addressed significant failures of Principals in their understanding of their regulatory responsibilities relating to their ARs. These failures include insufficient oversight of their ARs and inadequate controls over the regulated activities for which they have responsibility for.

Evidence collected by the FCA indicates, on average, principals cause 50% – 400% more supervisory cases than non-principals. The FCA are focused on reducing potential harm and to ensure the regime delivers good outcomes for consumers and markets.

The FCA are concerned that the AR regime may be used for purposes which are well beyond its original scope and urge improvements of Principal firms. The Treasury Select Committee’s Greensill Capital’s report highlighted how the AR regime could enable opportunities for abuse of the system and the risks of Government lobbying from representatives with ex officio responsibility and influence. All firms who currently have, intend to have or are ARs themselves should read this consultation paper.

To view our previous article on the Appointed Representative and Principal regime review, click here.

CP21/34 – Proposed changes:

There are two main areas of change outlined in the consultation paper:

  • Additional information on ARs and notification requirements for principals

The FCA are aiming to reduce potential harm for consumers and markets by collecting more data that will enable them to identify potential risks more easily within principals and their ARs. This is very important to the FCA in assessing whether the principal has the expertise and systems and control to effectively oversee its ARs.

  • Clarifying and strengthening the responsibilities and expectations of principals

We anticipate that the FCA will provide more clarity of the rules and additional guidance for principals on their responsibilities, and their expectations of how principals should act and oversee their Ars more effectively.

Desired outcomes:

The FCA expect three main outcomes from the proposed policy changes:

  • Better monitoring, oversight, and management of ARs from Principals
  • Improved access to better quality information on principals and ARs for consumers which will lead to good decisions when choosing products or services
  • Improved data collecting on principals and ARs’ activities through regulatory reporting

Next steps:

Upcoming milestones for the AR regime include:

How can Complyport help?

If the information above has raised any questions or you think your firm may require assistance in completing the response form 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 numerous ways, namely in:

  • Understanding your firm’s responsibilities for your AR’s and FCA expectations.
  • Ensuring that your systems, controls, and resources are adequate to achieve proper monitoring of your ARs.
  • Risk assessments of harm(s) to consumers or market integrity of the activities of an AR
  • Proper termination of an AR relationship
  • Compliance with the relevant policies and regulations
  • Provide a regulatory Health-check
  • Review of Policies and Procedures
  • Horizon Scanning of future regulatory change and advise compliance

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.