Closing regulatory gaps between principals and appointed representatives

The Financial Conduct Authority has recently published its final rules and guidance for enhancements to the appointed representatives regime. The reforms, consulted on in December 2021, respond to the disproportionate level of compensation claims, supervisory cases and complaints that these arrangements produce. Charlotte Hill and Marcel Nengou examine the new requirements.

Charlotte Hill is a partner and head of the Financial Services Regulatory group at Taylor Wessing in London, where Marcel Nengou is an associate. Contact them on c.hill@taylorwessing.com and m.nengou@taylorwessing.com.

Background

The AR regime is set out in primary legislation [1] and enables unauthorised businesses (such as insurance brokers) to undertake regulated activities in the United Kingdom without having to be authorised by the FCA. [2] Under the regime, an authorised firm ('principal') contracts with an AR for the AR to offer certain financial services or products such as advising on and arranging/making arrangements for different financial products or services in return for the principal accepting responsibility for the AR's actions and complying with regulatory obligations.