Could the outcome of the FCA’s survey spell reform for the AR system?
HM Treasury (HMT) has called for evidence to consider whether reform of the AR system is needed. This comes in response to increasing levels of harm being identified across all sectors of the financial services industry where firms have Appointed Representatives (ARs).
The FCA has supported the Treasury, setting out the plan for a survey and consultation process to investigate the systems potential shortcomings.
The call has highlighted that harm is often caused where firms don’t undertake thorough due diligence before appointing a new AR, and where there are gaps in oversight in their ongoing relationship. It’s the FCA’s aim to make sure firms are competent in their compliance and oversight, financially sound and delivering fair outcomes for the consumer.
Putting its plan into action in December 2021, the FCA invited all regulated firms that have ARs to participate in its survey. The survey asked firms to provide details on their ARs, including:
- AR group structure
- Details of any conflicts of interest
- Sales monitoring methods and volumes
- Products sold by the AR and methods of selling
- Financial information, including how much revenue is generated from regulated activities compared to non-regulated activities
- Complaints information
ROCK’s response to the FCA survey
As ROCK takes pride in having a thorough level of understanding about our Appointed Representatives, we were happy to be able to complete the vast majority of the survey ourselves. We called for help from our partners where the AR’s own financial revenue details needed to be provided which, thanks to our ARs’ swift assistance, we were able to deliver in time for the FCA’s deadline.
The survey highlighted to us the importance of having a clear picture of who our ARs are, how they operate and that the ability to demonstrate this understanding in detail is a key component to meeting our ongoing regulatory obligations.
What the future holds
The investigations are ongoing. The FCA have now launched their consultation, which will gain industry feedback about its draft proposals to improve and strengthen the rules governing the AR system. Their changes outline plans to increase the responsibility of firms to provide information about their ARs. We’ll talk about the consultation process in more details in our next blog post so don’t forget to check back here to read more.
But the takeout is that reform is on the cards, and this could be good news for our ARs and their customers.
We already have a robust due diligence and oversight programme, bolstered by the launch of our new compliance and oversight portal, ARM, which makes it easier than ever to maintain transparency and collect the evidence required by the FCA from our AR partners.
We’re also proud to have a close reciprocal relationship with our ARs, where we think there’s a mutual understanding about the importance of ensuring fair outcomes for consumers and offering an exceptional customer experience.
If you have any questions about the AR survey, please feel free to get in touch with our team via live chat. Click here to chat today. Alternatively, you can get in touch via email at [email protected] or call us.
The Appointed Representatives regime: Call for evidence: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1037802/CfE_on_Appointed_Reps_Regime.pdf
Financial Conduct Authority consultation paper
Improving the Appointed Representatives regime: https://www.fca.org.uk/publication/consultation/cp21-34.pdf