FCA restrictions amid AR crackdown.

Steve Walton writes…

Steve Walton

According to media sources, the Financial Conduct Authority (FCA) has placed 10 firms under restrictions for failing to meet its expectations on overseeing Appointed Representatives (AR).

This follows the FCA’s launch of a dedicated AR department last year to focus on tackling harm posed by Principal firms and their ARs.

Toby Hall, head of department for ARs at the FCA, said: “We made changes because we could see a real issue with the way appointed representatives were being overseen by their Principals.

“Consumers are at risk of being mis-led and mis-sold, with a disproportionate number of claims relating to appointed representatives being made to the ombudsman and FSCS.”


It’s clear that the regulator has increased its focus on ARs and, with more data now being collected, the FCA are becoming better informed on how appointed representatives are behaving and how they fit into the overall business of their Principal.

The regulators expectations relate to the collection of additional information on ARs and strengthening reporting requirements for Principals, whilst also strengthening the responsibilities of the Principal, to ensure a greater oversight of AR activity.

The assessment and monitoring of the risk that ARs pose to customers and markets is a key element and there is an expectation for Principals to review information on their ARs’ activities, business and senior management annually, and to take appropriate action including the termination of an AR relationship where required.

The FCA has written to more than 3,000 Principals about their obligations to properly oversee the behaviour and conduct of their ARs. The regulator is also collecting data on every AR, across the breadth of financial services, which is helping to identify where consumers may be at risk of harm.

This all sits in line with the forthcoming introduction of the FCA’s Consumer Duty on 31 July 2023, which requires firms to act to deliver good outcomes for consumers and make sure that they are properly supported while using a financial product or service.

The new FCA AR regime came into operation last year and firms should already have their house well in order by now. However, given the regulators recent interaction with them placing restrictions on 10 firms – of which it is reported 4 firms are from within the insurance industry – it appears that there may well still be work to do.

It’s not too late for Principal firms and their ARs to take action and ensure that robust systems and controls are in place to meet requirements.