The Government has decided, years after its predecessor sought views on the issue, that the Appointed Representatives regime should stay in place in its current format. However, it does recognise that poor oversight continues to put consumers at potential risk, but proposes to address this by targeted and proportionate action. It plans to consult initially on 2 reforms:
- to require any authorised firm wishing to use an AR to get FCA permission to do so – while the Government welcomes what the FCA has done to tighten up expectations and supervision of principals it thinks legislative change is warranted. The Government views this change, and the requirement for an FCA permission to “act as principal” as akin to the requirement for FCA permission to approve financial promotions; and
- to permit consumers to complain to the FOS about AR actions even in cases where the authorised principal is not responsible for the issue in dispute.
Among the issues addressed in the original paper which are not to be taken forward are:
- narrowing the scope of activities ARs are permitted to conduct to remove higher risk activities;
- extending the responsibility of the principal to all regulated activity of an AR, whether or not the principal had accepted responsibility; and
- giving the FCA new regulatory powers that would apply directly to ARs, such as information requests and investigatory powers.