FCA says there`s "more to do" in oversight of Appointed Representatives

Regulatory news

2024-09-07 09:29:53

2.08W

The FCA found some firms were taking a tick-box approach to complying with its AR oversight rules.

UK financial regulator Financial Conduct Authority (FCA) has come out with a statement that oversight of Appointed Representatives (ARs) is improving, but that there is more to do.

The FCA has set out good practice and areas for improvement to help principal firms effectively monitor their ARs. The findings follow a review of how principals are meeting its enhanced AR rules, introduced in 2022. The analysis involved a telephone survey with 251 principals and in-depth assessments of documentation from 23 firms.

Examples of good practice from principals included keeping clear documentation to show compliance with the FCA’s enhanced rules, and using a broad range of checks and information to oversee and monitor ARs’ activities.

But 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:

1 in 5 principals had not carried out a required self-assessment or annual review of their ARs.
Approximately half of principals were not regularly reviewing their AR agreements.
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.
Most firms had not changed their AR onboarding or termination procedures since the rules were introduced.

Jane Savidge, Interim Head of Department for Appointed Representatives said:

“Some firms have been embedding our rules well, but some aren’t getting the basics right and are taking a ‘bare minimum’ approach.

“Principals must have clear, written AR agreements from the outset and effectively monitor their ARs to make sure they act within scope.”

The FCA said 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.

Gerald Segal

Gerald is the founder of FNG and is one of the most experienced writers covering the online trading sector. Prior to starting FNG, Gerald founded Forex industry B2B news website LeapRate.com in 2010, selling it in 2018 to publicly traded Catena Media plc (STO:CTM). An avid skier, cyclist and ice hockey player, Gerald was previously an investment banker for more than a decade at Bear Stearns, Robertson Stephens, and Merrill Lynch. Gerald holds an MBA from Columbia University in New York and a BCOM degree from the University of Toronto.