8th December 2022 Deadline - Stronger FCA Oversight Of ARs

Dec 2, 2022 4:07:15 PM

What has happened?

In December 2021, the FCA issued a consultation paper, CP 21/34 on improving the appointed representatives (AR) regime and tackling consumer harm from this model.

The consultation ended on 3 March 2022. The FCA reviewed the feedback and published its follow-up Policy Statement (PS 22/11) and final rules in August 2022. The implementation date for the final rules is 8th December 2022.

What do you need to do?

The FCA confirmed in its Policy Statement PS 22/11 wide-ranging new rules intended to make principal firms more responsible for their appointed representatives.

It emphasised in the PS that principal firms are responsible for ensuring that their ARs comply with the FCA’s rules and that while some principals do this effectively, many do not adequately oversee the activities of their ARs.

The new rules are intended to help prevent consumers from being mis-sold to or misled by ARs and to prevent misconduct by ARs undermining markets operating fairly and safely. Principal firms will need to, amongst other things:

• Apply enhanced oversight of their ARs, including ensuring they have adequate systems, controls and resources,
• Assess and monitor the risk that their ARs pose to consumers and markets, providing oversight similar to that provided in their own business,
• Review information on their ARs’ activities, business, and senior management annually, and be clear on the circumstances when they should terminate an AR relationship,
• Notify the FCA of any future AR appointment 30 calendar days before it takes effect, and
• Provide complaints and revenue information for each AR to the FCA on an annual basis.

This toughening of the requirements applying to principal firms comes, of course, when those firms should also be working towards the implementation by July 2023 of the Consumer Duty, which will apply to any AR involved in creating or distributing financial products or services for or to retail clients. See our blog post on the Consumer Duty here.

How can we help you?

If you’d like to know more about how we can help you with your appointed representative or IAR and Consumer Duty arrangements, or with any other regulatory compliance issues, our expert team is here to help.

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