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Update

Principal firms that recruit appointed representatives (AR) are responsible for their activities and should therefore ensure they are effectively supervised and that the relevant individuals within the AR are fit and proper and comply with the FCA’s rules.

When appointing an AR, the FCA expects high-quality notifications that demonstrate the principal firm understands its responsibilities and has appropriate systems and controls in place to supervise the AR.

Prior to an AR’s appointment, a notification must be sent to the FCA at least 30 calendar days before the intended start date. In many cases it may take longer to complete the assessment if the FCA requires additional information; which may be the case where a principal firm is appointing its first AR, or the business model makes effective oversight more difficult.

Before sending the notification, firms that intend to appoint an AR must carry out their own checks and due diligence, which includes verifying that the AR is financially stable and that staff are competent. Firms are then responsible for keeping the required information and records for future reference.

The necessary checks and due diligence must also be carried out before submitting Approved Persons applications. This includes:

• Checks of relevant information concerning a candidate’s fitness and propriety in the public domain and raises questions with the candidate to ensure risks are identified. Information that may be relevant to the FCA’s assessment of the candidate must then be shared.
• An in-depth review of the candidate’s competence and suitability for the role. Where necessary, this may include testing the candidate’s competency with measurable training and the development of a remedial plan to deal with gaps.
• Evaluating the candidate’s employment history and reasons for leaving each role, clarifying products and types of customers the candidate has been involved with and any risks that may arise in the future.
• Checks of a candidate’s previous and current company directorships and verification against Companies House and overseas records where available.
• Assessing whether the candidate has the capacity and experience to perform the role that the firm is seeking approval for.
• Obtaining a standard Disclosure and Barring Service (DBS) check where appropriate.

If something is missing from a firm’s assessment of the candidate, the FCA will consider due diligence to be incomplete and will challenge the firm.

Thistle can assist your firm with preparing these applications, which includes anticipating FCA questions to reduce the approval timescales.

Link: https://www.fca.org.uk/firms/appointed-representatives-principals/recruit-change-terminate