We previously reported on the introduction of the FCA’s policy statement PS22/11: Improvements to the Appointed Representatives regime in August 2022. As we approach 8th December 2022, we will begin to see the new policy rules come into effect.
The FCA has expressed some concern that some principals engaging Appointed Representatives (“ARs”) have fallen short in their due diligence, systems and controls and supervisory measures. The FCA has made it clear that principal firms are responsible for ensuring ARs are compliant with the FCA’s rules, however this has not always been reflected in practice. This increases the risk consumers face of being misled and mis-sold products and services and threatens to undermine market integrity.
As part of new and improved reporting requirements, the FCA aims to tackle these issues by maintaining clearer oversight on the AR regime. The FCA will do this by sending firms section 165 data requests to get the details of their appointed representatives as well as introducing new AR notification requirements.
What can firms expect now?
Principal firms can expect to receive a data request for existing ARs from the FCA between 8th-10th December 2022. The s165 request will go to the principal user on the firm’s Connect account, so it is important that firms ensure this information is up to date in anticipation of this. Firms will have until 28th February to respond to the data requests.
For new AR arrangements, principals must submit AR notification forms at least 30 days prior to the AR arrangement commencing. Ad hoc reporting of changes to the types of regulated activities ARs conduct must be made 10 days before the changes take place. AR notification forms will also come into force on 8th December 2022.
What information must be disclosed?
Firms may wish to prepare the information in advance of the FCA’s request. There are four key areas of information principals must provide including:
- Explaining the primary reason for the appointment of the AR
- The nature of the regulated activities the principal permits the AR to carry on
- Indicating whether the AR will conduct any non-regulated activities, and if so whether these are financial or non-financial.
- For financial non-regulated activities indicate what the activity is
- Disclosing if the AR has had a different principal and why this changed
Annual requirements for Principals:
- Submit the estimated revenue data for each of their ARs using revenue bands
- Conduct an Annual Review to verify the details of an AR on the Register and confirm they are only carrying on activities permitted by the principal – report changes to the FCA
- Conduct a self-assessment of their ARs
- Submit complaints data for all their ARs
How can Complyport help?
If this article has raised any questions about the upcoming changes to the Appointed Representatives Regime, or you think your firm may require assistance, please contact Jan Hagen via jan.hagen@complyport.co.uk to book in a free consultation.
About Complyport
Complyport is a 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.
