UK Financial Conduct Authority Findings from Review into Firm Oversight of Appointed Representatives

The U.K. Financial Conduct Authority has published its key findings, good practices and areas for improvement following a review of how principal firms are meeting the FCA's enhanced appointed representative rules that were introduced in December 2022. Examples of good practice from principals included keeping clear documentation to show compliance with the FCA's enhanced rules, outlining any material deficiencies in the principal's AR oversight and proposals to address them, and using a broad range of checks and gathering information to oversee and monitor ARs' activities. Firms are expected to consider the examples of good practice when reviewing their own approach to AR oversight. The FCA found some firms were taking a tick-box approach to complying with its rules, relying on basic information like website checks, or using self-declarations from their ARs, to demonstrate effective oversight. The review also found: (i) 1 in 5 principals had not carried out a required self-assessment or annual review of their ARs; (ii) approximately half of principals were not regularly reviewing their AR agreements; (iii) a third of principals were not using data or management information to keep tabs on whether ARs were acting within the scope of AR agreements; and (iv) most firms had not changed their AR onboarding or termination procedures since the rules were introduced. The FCA states that it has followed up directly with firms in the review and will take swift action where it sees principals not meeting its standards in the future.

Return to main website.