What is happening?
The FCA's changes to improve the appointed representatives regime takes effect on 8 December 2022. The changes are aimed at enhancing consumer protection and placing more responsibility on authorised financial services firms ("Principals") for their appointed representatives ("ARs").
The new rules see a tightening of supervision and controls of ARs, as principal firms will be required to:
- increase the level of oversight of their ARs, including ensuring ARs have adequate systems, controls and resources;
- carry out annual reviews of their ARs and an annual self-assessment of the Principal's own compliance;
- assess and monitor the risk that ARs pose to consumers;
- provide additional information to the FCA on their existing and new ARs;
- notify the FCA of any future appointments at least 30 calendar days prior to its effect; and
- annually provide to the FCA data relating to complaints and revenue.
What actions should you take?
Firms should understand their obligations under the FCA's updated rules and expectations and take the relevant steps to be ready to comply.
Principals will need to:
- notify the FCA of AR appointments at least 30 calendar days prior to the appointment taking effect;
- collate data on existing ARs as well as any new AR appointments to provide to the FCA – this information includes the primary reason behind the appointment and whether the AR will provide services to retail clients;
- check the accuracy of the details of their ARs on the FCA register;
- provide the FCA with complaints and revenue data on their ARs, up to 60 business days after the principal's accounting reference data; and
- integrate the annual review requirements into existing internal reporting processes
However, the FCA has put in place transitional arrangement to give firms more time to comply with some of the new rules, such as those required to submit information on an on-going basis and to review ARs and self-assess annually.
Is there anything else you should look out for?
As part of the FCA's enhanced reporting requirements, Principals should expect to receive a Section 165 request for data about their current ARs at some point in December (potentially between 8-10 December). Firms will then have until 28 February 2023 to respond.