Appointed Representatives

This post is aimed at firms with either Interim Permissions or have recently received full authorisation and are considering entering the Appointed Representative regime either as a Principal firm or as an Appointed Representative.

Responsibility and accountability:- All firms thinking of taken on Appointed Representatives must remember that they (as the Principal) are fully accountable and responsible for all sales undertaken by the Appointed Representative (AR), this also applies to Introducer Appointed Representatives (IAR’s), and that this is not an easy option or a way of avoiding regulation.

The framework- An Appointed Representative (AR) is a firm that carries on regulated activities under the supervision of another firm that is directly authorised as the Principal. An Introducer Appointed Represented (IAR) is only authorised to introduce customers to the Principal and may with permission be allowed to distribute non real time financial promotions under the guidance and supervision of the Principal.

Example: Click Here 

Appointed Representative responsibilities:- An AR is a person/firm who is party to a contract with an authorised firm permitting them to carry on certain regulated activities, such as selling products where the Principal has the appropriate permissions.

• The AR has responsibility to understand and comply with the regulations.
•  Provide the Principal firm access to staff, records and premises to enable the principal to carry out its responsibilities.
• Notify the Principal firm of any breaches of rules or policies the Principal firm has put in place.
• Provide relevant management information as defined in the contracts or as and when requested by the Principal firm.

The Principal firms responsibility- The Principal is the authorised and regulated entity who permits an AR/IAR to carry on regulated activities.

The Principal must have adequate controls and resource in place at all times to ensure the AR’s are fully compliant and appropriately monitored at all times. Remember the Principal firm is responsible for the actions of the AR’s and IAR’s within their network. The following list are some of the key areas the Principal firm is responsible for:

• Maintain contracts with each Appointed Representative that clearly explains the responsibilities of both sides.
• Monitor compliance within each of the Appointed Representatives, this should be risk based.
• Supervise each Appointed Representative, ensuring management information can identify any trends.
• Notify the FCA immediately via the online ‘connect’ system for any new AR’s or any terminated AR’s exiting the business.
• Ensure Appointed Representatives are competent to perform their tasks ensuring records are maintained that evidence that the Training and Competence scheme is operating effectively.
• Ensure AR complaints are reported and monitored effectively.
• Embedding policies and procedures that enable their Appointed Representatives to understand how to meet their regulatory requirements.
• Ensuring Gabriel reporting is timely and includes all AR relevant data.