The UK’s Financial Conduct Authority has warned UK authorised firms about the significant legal and regulatory risks associated with accepting business from or through (un)authorised introducers and lead generators. The warning lists 6 “areas of concern identified”; 7 “warning signs”; and 7 things for authorised firms to do next.
The warning follows the FCA’s recent criticism of authorised firms relying on appointed representatives in the general insurance sector, where similar risks and issues were identified.
The FCA only indirectly mentions the bigger risks that introducers and lead generators will be running on their own account, if they’re engaging in regulated activities without being authorised or exempt – a relatively easy mistake to make, given the complexity of some of the law in this area. Fortunately, criminal prosecutions, imprisonment and fines are rare – but ‘big ticket litigation’, voidable contracts, 3rd-party claims for compensation, and consumer redress schemes are not. Time to get your arrangements checked?