How Can You Achieve Better Compliance as a Principal Firm and Appointed Representative?
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Are you striving for compliance as a principal firm? Then you should utilise an appointed representative.
An appointed representative adheres to the regulations set by the FCA through their conduct of financial services to ensure a fair service is provided for both individual consumers and the financial market as a whole through the support and guidance of their Principal Firm.
The Financial Conduct Authority requires Principal Firms to maintain stronger oversight and regulation of their Appointed Representatives, to ensure better compliance is achieved.
What Is an Appointed Representative?
An appointed representative is a firm or person who achieves FCA compliance in their services, as certified by the FCA. An appointed representative is overseen by a principal firm – who is responsible for ensuring the appointed representative adheres to the directives of the FCA.
To ensure compliance as a principal firm (via the appointed representative achieving FCA compliance), the Senior Management & Certification Regime (SM&CR) holds individuals within the appointed representative firm accountable for a fair financial service. The senior management regime FCA applies to staff at all levels, strengthening market integrity throughout businesses.
Whether you are a part of an appointed representative network, or are looking to enrol within one, it is important to update yourself regarding the requirements of the Financial Conduct Authority to ensure you are achieving business compliance and providing the best financial service you can.
Who Is Responsible for the FCA Compliance of an Appointed Representative Firm?
The principal firm is responsible for the FCA compliance of their appointed representative. The principal firm is the authorised firm that has appointed the appointed representative to conduct regulated activities on its behalf. The principal firm has the ultimate responsibility for ensuring that the AR complies with all relevant FCA regulations and requirements.
ASUK can act as this principal firm for your dealership, taking on responsibility for your FCA compliance so you don't need to seek direct authorisation yourself. Find out more about how to become an appointed representative with ASUK.
What Has Changed for Appointed Representatives?
Are you striving for compliance as a principal firm? Then it's important that you keep up to date with the recent changes to the standard. The FCA has made changes to the appointed representative regime to increase FCA compliance in appointed representative firms.
These changes mainly centre around the management of principal firms, who are responsible for appointed representatives, and include the following areas:
1. Increasing network sizes
The multiple appointed representatives overseen by a singular principal firm is known as a network. As the size of a network increases for a principal firm, the firm is expected by the FCA to maintain high standards. This includes having the financial capacity and facilities to monitor firms based upon observation of financial services in action, such as sales or advice, alongside file reviews.
2. Rising harm within the financial market
The catalyst for the changes made by the FCA to the appointed representative regime is the increase in harm within the financial market.
It has been highlighted that there is an increased risk where principal firms are used, since the appointed representative does not directly interact with the FCA. To ensure business compliance in the future, the FCA have targeted the responsibility and expectations of principal firms, tightening them to ensure appointed representatives provide a fair service and customers are treated fairly (FCA TCF).
3. Tackling AR oversight
To address the oversight of appointed representatives, principal firms are expected to streamline their FCA certification regime, ensuring appointed representatives are properly vetted before they are onboarded, and that the information given to the FCA going forwards is of good quality and quantity. This allows the FCA to identify and address risks of an appointed representative at a much earlier stage.
4. FCA: Treating Customers Fairly
By considering the areas of risk highlighted here, you can increase FCA compliance as an appointed representative with the FCA.
Still unsure what measures you must continuously comply with to remain a principal firm of the FCA? We're here to help.
We offer a bespoke service focused on compliance, oversight, governance but just as important is support and guidance. Acting as your principal firm, we help your dealership become an appointed representative without the burden of seeking direct FCA authorisation — taking on responsibility for your day-to-day FCA compliance, conducting monthly audits of your customer records, and embedding Treating Customers Fairly across your dealership. We provide timely and important KPI (Key Performance Indicators) to help support the senior management team of the AR to give confidence and peace of mind about compliance in their business.
Any questions? Contact us today!
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