Information for principals with overseas appointed representatives
What has happened?
In June 2024, the FCA issued information about the challenges and expectations for principal firms that have appointed overseas appointed representatives (OARs).
What are the key points?
Feedback received to the FCA consultation on improving the appointed representatives regime showed that principals may face challenges in overseeing and communicating effectively with their OARs due to:- differences in legal, accounting, and regulatory requirements for each jurisdiction,
- geographical distance, and
- cultural and language differences
The FCA expects monitoring and oversight of OARs to take account of any extra challenges that may arise for these reasons.
Principal firms are asked to consider whether customers dealing with an OAR will receive equivalent services, protections and outcomes to those dealing with UK-based appointed representatives. If not, firms should make sure customers are given suitable information to alert them to any differences. Principals must also establish on reasonable grounds, on a continuing basis, that the activities of their OARs do not result in undue risk of harm to consumers or market integrity.
When completing its annual self-assessment document, any principal should consider the additional risks of having OARs when assessing its controls and resources as per SUP 12.4.2(3).
The application of the approved persons regime to OARs (including individuals within OARs performing a customer function) depends on, among other things, whether the activities are carried on from an establishment in the UK and how long individuals performing a customer function spend in the UK annually.
Principals must also ensure that AR agreements in force require their OARs to comply with relevant rules (SUP 12.5.5R and including, for example, the communication requirements in GEN 4.4.1R).
If they cannot adequately monitor the activities of an OAR, or if it does not carry on regulated activity in the UK, principals are requested to consider terminating the AR agreement.
The FCA has disclosed that it continues to use data to inform its approach, including determining whether any targeted supervisory engagement with principals with OARs is needed in future.
How can we help you?
Thistle Initiatives has supported principal firms and their ARs for over 10 years as a trusted compliance and regulatory adviser. In addition to assisting these firms as-and-when, our team of specialists can serve as your right hand in meeting and complying with FCA regulations. We understand the importance of staying up-to-date and compliant and are dedicated to providing the guidance and support needed to do so.
Are you looking for help with your OAR supervision arrangements, or more general regulatory questions? If so, we can help in any of the following ways;
- Assessing your supervision approach for OARs and ARs, including due diligence, AR audits, training and competence and reporting
- Helping you to assess the fit and proper nature of Approved Persons within OARs or ARs
- Reviewing your annual self-assessment approach
- Advising on the completion of an annual compliance monitoring programme
- Advising on OARs’ and ARs’ compliance with the Consumer Duty
Contact our specialist team now to schedule a free consultation. Get in touch with us by calling 020 7436 0630 or sending an email to info@thistleinitiatives.co.uk.