Time ticking on meeting the enhanced requirements of the new AR Regime
There are some key upcoming deadlines for the enhanced Appointed Representative (“AR”) regime which Principal firms should ensure they are on track to meet.
While the new rule changes to the AR Regime came into play on 8 December 2022, the FCA granted firms a transitional window to work on their reporting and oversight arrangements in order to meet the enhanced requirements.
By 30 November 2023, Principal firms must have completed the first Annual Review of their ARs and must have completed a Self-Assessment document. These should then be reviewed and signed off annually by the firm’s governing body. Note: records of these must be kept for six years.
Although November might feel a long way away, don’t underestimate the time and resource required to complete these reviews to the standard the FCA are expecting. We’d recommend firms factor in several hours per AR (not including the time spent requesting and collating the data and information needed to complete the review, if you don’t already have it!).
Principal firms are also subject to new ongoing reporting requirements which require them to provide other information such as AR complaints data and revenue information. The timeframe for this will depend on whether the first accounting date falls on or after 1 December 2023. Specifically, firms should refer to the Form provided in SUP 12 Annex 6 and complete in line with SUP 12.7.9D. Any delays or failure to submit will likely lead to follow up from the FCA and could result in further FCA action. We don’t expect the FCA will be lenient when non-compliance is identified, especially given the time available for firms to prepare.
Principal firms should also consider the timing of amending contracts (enabling termination) where they have been relying on transitional rules. Appointed Representative agreement contracts should also have been updated to reflect the need for additional information gathering and enhanced oversight.
It’s crucial that Principal firms have done the underlying work towards ensuring they meet the enhanced requirements. Such work should not be taken lightly; the FCA can and likely will ask to view these documents, and if they are not detailed and robust it could cause further work and costs to rectify down the line.
As well as increased FCA reporting requirements, the bar has been raised on the expectations of Principal firms in how they monitor their ARs: Principal firms must ensure that ARs are monitored to the same standard as they would an employee.
ComplyCraft has a comprehensive AR Toolkit which could assist Principal firms in ensuring they meet the enhanced reporting and oversight requirements in good time. Our toolkit will help you comply with the FCA requirements and help to demonstrate you are taking the right steps to meet the ‘higher bar’ set by the regulator, potentially saving you time and money in the long run. We also have AR Regime experts on hand who can talk you through what’s needed and conduct a gap analysis on what you currently have.
Please feel free to reach out if you would like to discuss.