Technical Insights: What Are The FCA's Guidelines On Improving The Appointed Representative's (AR) Regime?

In September 2023, the FCA published data from its 2021 and 2022 data requests sent to principal firms and outlined how they are on improving the appointed representative's (ARs) regime through greater use of data and what they expect from firms.

What is an appointed representative (AR)?

An AR is effectively 'renting' the principal firm's permissions and is restricted to only those regulated activities that the principal is authorised to carry out. The principal firm accepts responsibility for monitoring the AR.

What are the main failures highlighted by the FCA of principal firms' oversight of ARs?

Due diligence failures

Data collected by the FCA shows that the majority of principals have established due diligence checks when recruiting new ARs and are completing ongoing checks. However, failures were noted in not repeating due diligence checks relating to ongoing suitability, financial resilience, or criminal records checks.