On the 8th December 2022, the Financial Conduct Authority (“FCA”) made changes to Chapter 12 of the Supervision Manual (SUP 12) of the FCA Handbook, which is concerned with the appointed representative (“AR”) regime.
The appointed representative regime allows ARs to engage in regulated activities without having to be FCA authorised. The FCA notes in PS22/11 that whilst the regime has benefits, they are infact seeing a wide range of harm across a multitude of sectors where AR’s are appointed. This is due to the fact that their principals are failing to undertake the necessary due diligence before their appointment, or once their role has begun, their principals are failing to provide an adequate level of oversight and/or control.
Consequently, further compliance requirements have been implemented on principals to ensure:
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additional and more timely information of the AR’s is provided to the FCA, including the process in which the AR’s are overseen (Chapter 3, SUP 12); and
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they adhere to the strengthened principal responsibilities and expectations (Chapter 4, SUP 12).
It is important for businesses to ensure these changes have been implemented within their policies and procedures, and that AR agreements have been reviewed to ensure that these enhanced compliance requirements can be met. The FCA has confirmed that they will be sending principal firms a section 165 request which requires them to provide information about their AR’s, the nature of their regulated business, anticipated revenue etc. This should have been received by principals between 08th –12th December 2022, and the deadline for completion is the 28th February 2023.
For further information concerning the changes to the AR regime, questions on how this will affect your business or to discuss the issues raised within this update, please contact our regulatory team on 01276 686 222 or mark.chapman@herrington-carmichael.com.
