In the UK the Financial Conduct Authority (FCA) offers the Appointed Representative regime, a way for firms to conduct regulated activity in the UK without being fully authorised. In order to become an AR you will be required to partner with an already regulated entity, a Principal Firm or Host (PF). This route into the regulatory environment can be a permanent one or an interim arrangement before obtaining a full UK FCA Authorisation (link to UK authorisations page).
The FCA places significant reporting and oversight obligations on a PF and consequently it is important that both the AR and the PF undertake appropriate due diligence on each other to ensure the “fit” is right. PF’s must understand all aspects of an AR’s business, and will need to ensure adequate systems and controls are in place to oversee the business undertaken by the AR.
Given that the AR regime is an area of regulatory focus and change Effecta can provide invaluable independent solutions to both the AR and the PF by supporting both to ensure that the AR is operating in line with the PF’s systems and controls environment and that the PF has documented and implemented the enhanced FCA requirements.
Any failings by the AR will be recorded against the PF and therefore it is important the PF’s can evidence the due diligence and oversight undertaken as well as accurately complete the FCA reporting requirements.
This type of arrangement must be viewed as a partnership and therefore you must be comfortable with your business partner as they play a key role in your own potential success. Effecta can assist in making this happen by:
- Reviewing the current systems and controls a PF has in place over its AR relationship(s) and assessing whether they meet UK regulatory requirements
- Supporting PFs in identifying any required enhancements to their oversight of ARs and aiding the implementation of any changes to the control environment
- Engaging Senior Management in the changes to the AR Regime: Writing Board Papers on the UK regime and how it practically effects companies
- Completing monitoring checks on ARs on behalf of PFs; acting as an extension of a Firms Compliance Department to ensure the required checks are completed.
- Providing training to AR’s to ensure Senior Management are comfortable that they are being kept up to date with regulatory change.
EFFECTA’S Essential Insights: A Regulatory Update
February 16, 2023
Welcome to EFFECTA’s Essential Insights, a quarterly newsletter aimed at providing its readers with succinct overviews...read more