What’s an FCA Appointed Representative (AR)?
The FCA’s website states that “an appointed representative is a person or firm who conducts regulated activities and acts as an agent for a firm directly authorised by the FCA.”
The directly authorised firm is known as the appointed representative’s ‘principal’.
How does the AR / Principal Relationship Work?
Firstly, there needs to be a written contract between the principal and the AR documenting the arrangement. It’s the principal’s responsibility to ensure the AR complies with FCA regulations. The AR has to allow the principal access to its premises, staff and records (as applicable) so they can carry out their supervisory responsibilities.
What are the Principal’s Responsibilities?
- The principal is accountable for the products the AR sells and arranges, and any advice they give customers.
- The principal must carry out adequate checks on the AR and notify the FCA they have been appointed.
- The principal must ensure the AR is competent and that the AR can maintain their level of competence.
- The principal must have control systems in place to manage and reduce any risk.
- Ensure that the customers of the AR are treated as fairly as they would be if dealing with a directly FCA authorised firm.
If you’re thinking about appointing an AR, then here are a few key questions to ask yourself:
- Are you able to carry out the necessary in-depth references and financial checks on the AR?
- Will you be able to ensure the ongoing competence of the AR and ensure their appointment doesn’t present any risk to your business?
- How will you monitor the level and quality of advice provided by the AR?
- Are you able to hold regular meetings with the AR?
- Who in your business is competent to assess the AR?
- Do you have access to rigorous management information so you can monitor the performance of the AR?