FCA Policy Statement PS22/11 Appointed Representatives (AR) Rules  

YOUR COMPLIANCE MATTERS – FCA Policy Statement PS22/11 Appointed Representatives (AR) Rules

Relevance:                   All Firms with (or planning to appoint) ARs.

Action required:           Review your AR position against the new FCA Rules effective 08.12.22

Having completed its Consultation, the FCA has published final rules, updating Firm’s obligations with regard to ARs. The new rules will come into effect from 08.12.22.

These rules build on the existing expectation that Firms will have appropriate risk-based controls over their ARs and have adequate resource to supervise them to the same standard as they would their own employees and business activities.

The Policy Statement can be found at https://www.fca.org.uk/publication/policy/ps22-11.pdf

We are not going to attempt to paraphrase the PS here as the document is far too long to make this effective. We will be working with firms impacted by the new rules to implement the actions needed to comply with them. We would draw relevant firms’ attention to the specific changes and requirements that they should be aware of, in the meantime:

1.    The FCA will need to be given 30 working days’ notice of the Firm’s intention to appoint an AR. As applications for Senior Managers at an AR already need to be submitted at the same time as the AR application (and potentially have a 90-day turnround) this may be academic.

2.    All firms with ARs will need to submit a return, within 60 days of the 8th December implementation date, outlining the basic information shown in the Appendix to this Newsletter

3.    Firms will need to provide a report annually, within 60 days of their own Financial Year End, detailing Complaints and Revenue information related to their ARs.

4.    Firms will need to complete an annual attestation of the AR firm details.

5.    Firms will need to ensure their ARs act within the scope of their appointment having considered guidance on what the FCA consider ‘reasonable steps’ to be in this respect.

6.    Firms will need to complete an Annual assessment of the:

a.    ARs solvency and suitability;

b.    Fitness and Propriety of Controllers, Directors, and Managers of the AR;

c.      Adequacy of its own controls and resources for monitoring and enforcing compliance within its ARs.

7.    Firms will need to complete an annual self-assessment of its compliance with the AR Rules.

Items 5 and 6 need to be completed by 08.12.23.

As Introducers (IARs) represent a lower risk, to the Regulator, the level of information required is commensurately lower.

Next steps

As mentioned, we have not attempted to cover the full detail of the PS here. Suffice to say, the FCA is planning to be far more intrusive in this area and this needs to be included in any planning relating to ARs (new or existing) in future.

Appendix – Initial FCA return