Some firms are using a “tick-box approach” around new appointed representative (AR) rules, the regulator has said.
The Financial Conduct Authority (FCA) brought out enhanced AR rules in 2022 that require principals to carry out annual reviews of each AR they appoint and annual self-assessments of their ability to oversee their ARs.
According to an analysis by the FCA, in which it conducted a telephone survey with 251 principals and in-depth assessments of documentation from 23 firms, there are examples of good practice, but some are “relying on basic information like website checks, or using self-declarations from their ARs, to demonstrate effective oversight”.
The regulator said that around a fifth of principals had not carried out a required self-assessment or annual review of their ARs.
It noted that around half of principals were not regularly reviewing their AR agreements and a third of principals were not using data or management information to oversee whether ARs were acting within the scope of their agreements.
Most firms have also not changed their AR onboarding of termination procedures since the enhanced rules were brought in.
The regulator said that examples of good practice include keeping clear documentation to show compliance with the enhanced rules, using a broad range of checks and information to oversee and monitor ARs’ activities, having clear written records of reviews and self-assessment that are signed off by the governing body, evidence of using a range of management information to assess the risk of harm to consumers or markets and consideration of Consumer Duty obligations when carrying out annual reviews.
Jane Savidge, interim head of department for ARs, 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.’”
Anna is currently the deputy editor for Mortgage Solutions and editor for Specialist Lending Solutions. She has worked as a journalist since 2019, having secured her Gold Standard NCTJ diploma from News Associates in a fast-track six-month course.
She started her career as a report at specialist publication The Insurance Insider covering a wide range of areas before joining Mortgage Solutions and Specialist Lending Solutions in 2021.
In her role, she helps put together and structure the news agenda for the day and writes up press releases, reports, interviews, analyses and exclusives across both titles. She also commissions blogs for Specialist Lending Solutions and hosts online masterclasses and in-person events across the business.
She has been shortlisted for three journalism awards, which include BIBA Journalist and Media Awards Scoop of Year Award in 2020, Headline Money Mortgage Journalist of the Year Award (B2B) in 2022 and 2023.
Prior to being a journalist, Anna worked in ecommerce across Snow + Rock, Cycle Surgery and Runners Need websites, and before that worked at specialist financial PR firm Rostrum.
In her spare time, Anna enjoys reading, seeing live music, and cooking for friends and family. When she gets a chance, she also enjoys hiking, skiing and indoor rock climbing.
