FCA: Principal firms embedding the new rules for effective appointed representative oversight – good practice and areas for improvement

FCA has set out good practice and areas for improvement to help principal firms effectively monitor their Appointed Representatives.  The findings follow a review of how principals are meeting its enhanced AR rules, introduced in December 2022.  Examples of good practice from principals included keeping clear documentation to show compliance with FCA’s enhanced rules and using a broad range of checks and information to oversee and monitor ARs’ activities.  However, FCA found, amongst other matters, that some firms were taking a tick-box approach to complying with its rules; approximately half of principals were not regularly reviewing their AR agreements; a third of principals were not using data or management information to keep tabs on whether ARs were acting within the scope of AR agreements, and most firms had not changed their AR onboarding or termination procedures since the rules were introduced.