Principal firm? There’s one email you don’t want to miss this week.

The FCA’s new rules (PS22/11) to improve the Appointed Representative regime take effect tomorrow (8 December 2022), and principal firms will feel the impact of the enhanced reporting requirements immediately.

Between 8 December and 10 December 2022, principal firms should expect to receive a Section 165 information request on the business of their ARs and the nature of the activities they conduct. This one-off exercise is being carried out by the FCA to ensure they have data on the entire AR population.

The request will be sent via email to the firm’s Principal User on Connect (so make sure your details are up to date!) and it will come in the form of an online survey, similar to the last survey in October 2021 and other recent FCA data requests e.g. IFPR data requests.  

However, don’t be fooled by the informal nature of an online survey. The information is being requested under the FCA’s powers contained in section 165 of Financial Services and Markets Act 2000 (as amended). It is mandatory for firms to respond and failing to do so (for whatever reason) may mean the FCA take further supervisory or enforcement action for non-co-operation.

FCA could, for example, issue a warning, vary/cancel a firm’s permission, withdraw an individual’s approved person status or issue a public censure or financial penalty. Whilst any of these sanctions may seem unlikely or a disproportionate for failing to respond to a survey, non-co-operation is taken seriously, and a lack of response (or an incorrect one) can be indicative or wider issues FCA may want to investigate further.  

As always, firms should take care to report complete and accurate answers in line with their Principle 11 obligations. However, this isn’t always easy when faced with unclear questions and regulatory terms. For example, firms will be required to disclose information on the ARs’ regulated activity, non-regulated financial activity, and non-regulated non-financial activity – understanding these terms and what is and is not in scope is key to reporting accurate information. Therefore, please do make sure to seek advice if you don’t fully understand a question asked before submitting your answers - inadvertently misreporting may result in unnecessary regulatory scrutiny. Firms that submit information which suggests to the FCA they are an outlier or are higher risk should also expect to be contacted again.

If you need assistance with completing the information request, or the information requested prompts questions around your AR control framework, please do get in touch.