The FCA has reviewed how principals are supervising their Appointed Representatives and has concluded that supervision has improved, but that firms could do more. It saw many principals keeping clear records of how they comply with the rules introduced in December 2022, but it also found firms that were using a more tick-box approach to compliance.
Key concerns included:
- 20% of principals had not carried out the required self-assessment or annual review of their ARs;
- around half of all principals were not regularly reviewing their AR agreements;
- around one third of principals were not using data or MI to keep tabs on whether ARs were acting within the scope of their agreements; and
- most firms had not changed their procedures for onboarding or terminating ARs since the rules changed.
The review included 250 firms, and the FCA is following up directly with firms who should be doing better.