FCA outlines assertive supervisory plans for wealth management firms
As the new FCA’s S165 data collection for Principal firms comes into action this Thursday
Last year it was widely reported across the press that David Cameron lobbied for Greensill Capital (where he was employed as an adviser) to join a scheme that issued government-insured loans. This brought unprecedented focus to Principal firms and the Appointed Representatives regime.
FCA’s review of the Appointed Representative regime
As Greensill was an Appointed Representative, the action the FCA could take was limited. The Treasury Select Committee recommended a review of the Appointed Representative regime. There was a Call for Information from HMT, and the FCA has published a Consultation Paper followed by Policy Statement (PS22/11) confirming new rules and its expectations in relation to Principal firms.
In reality, it is not surprising that the FCA is looking into the Appointed Representative regime. The regime started in 1986 and has grown significantly. There are approximately 3,400 Principal firms overseeing circa 37,000 Appointed Representatives.
By Thursday, 8th December, firms should have a plan in place detailing how they will undertake an annual assessment of their Appointed Representatives to address the concerns about this regime.
The FCA has also flagged the number of supervisory cases it has for Principal firms and the proportion of FSCS claims related to firms in the regime. Two of the FCA focus areas highlighted in its strategy document released earlier this year are:
This focus applies equally to Appointed Representatives as it does to Directly Authorised firms.
With the FCA introducing the Consumer Duty in 2023 that includes a new Principle 12 so that firms act to ensure good customer outcomes, it is essential that Principal firms take appropriate action to ensure compliance with PS22/11. This includes being compliant with the new rules and ensuring that the Principal’s oversight of Appointed Representatives meets the FCA’s expectations (which are confirmed in the Policy Statement).
So what should Principal firms be doing now?
There are several considerations and actions that Principal firms need to take, here are our experts’ recommendations:
Get help from the experts. With our specialist knowledge of the Appointed Representatives regime and Policy Statement 22/11, TCC can help you make sure that your firm is meeting all the new rules and the FCA’s confirmed expectations in relation to Principal firms.
To find out how we can help you deliver Appointed Representatives regime compliance, get in touch today.