On 6 September 2024, the FCA published the results of a review it conducted which assessed how its new rules and enhanced expectations for principal firms have been embedded. The FCA has also set out good practice and areas for improvement to help principal firms effectively monitor their Appointed Representatives (ARs).
The new rules and enhanced expectations were introduced in December 2022 and the analysis involved a telephone survey with 251 principals and in-depth assessments of documentation from 23 firms.
Findings
Among other things the FCA found that:
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Some firms were taking a tick-box approach to complying with the new rules, relying on basic information like website checks, or using self-declarations from their ARs, to demonstrate effective oversight.
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1 in 5 principals had not carried out a required self-assessment or annual review of their ARs.
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Approximately half of principals were not regularly reviewing their AR agreements.
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A third of principals were not using data