Improving the Appointed Representatives regime

The FCA has issued its Consultation Paper on improving the Appointed Representative Regime. The proposed changes outlined aim to reduce potential harm arising across the sectors where they operate.

Why the FCA are consulting:

The AR regime was created to allow self-employed representatives to engage in regulated activities without having to be authorised. Over time, it has evolved to include a wider range of business models across sectors and markets.

The FCA’s proposed changes to the AR regime aim to reduce potential harm and ensure that the regime delivers good outcomes for consumers and markets.

The FCA are seeing a wide range of harm across all the sectors where firms have ARs. This harm often occurs because principals don’t perform enough due diligence before appointing an AR, or from inadequate oversight and control after an AR has been appointed.

Evidence shows that, on average, principals cause 50 to 400% more supervisory cases than non-principals. It also shows that cases are higher than for non-principals across every sector.

The FCA’s proposals:

  • require principals to provide additional and more timely information on their ARs and how these are overseen, and 
  • clarify and strengthen the responsibilities and expectations of principals

Additionally, the FCA are seeking views, through a discussion chapter, on other potential areas of policy change. They have also collaborated with the Treasury on its Call for Evidence.

Next steps:

The FCA seek feedback on the proposals in this CP by 3 March 2022. 

Click the link to read the announcement:

Human Chain Paper | Improving the Appointed Representatives regime