The Financial Conduct Authority (FCA) in the UK allows firms that are not directly authorised to operate under the regulatory umbrella of an authorised principal, which takes responsibility for ensuring that the AR complies with FCA regulations.
Key Points About Appointed Representatives (ARs):
Regulatory Supervision
The principal firm is responsible for overseeing the AR’s compliance with FCA rules.
No Direct FCA Authorisation
ARs do not hold FCA authorisation themselves but are registered with the FCA and their details are available on the FCA Register
Common in Financial Services
In the UK, ARs are widely used in sectors such as insurance, investment, and consumer credit, due their ability to launch as quickly as 6 weeks.
Types of ARs
Introducer Appointed Representatives (IARs)
Can only introduce clients to the principal firm and distribute promotional material.
Full Appointed Representatives
Can conduct regulated activities on behalf of the principal firm.
Regulatory Governance
The FCA has tightened rules around ARs to enhance oversight and reduce risks of consumer harm, requiring principal firms to conduct thorough due diligence, ongoing monitoring, and annual reporting on their ARs. This has lead to greater compliance monitoring of ARs, to ensure that compliance and regulation is adhered to at all times.
