3. Februar 2022
On 3 December 2021, HMT published a call for evidence regarding the appointed representatives regime and the FCA published a consultation paper proposing policies to alter the requirements for principals.
Following the failure of the prominent appointed representative firm, Greensill Capital, the Treasury Select Committee published a report in July 2021 which found that the appointed representatives regime was being used for purposes beyond those for which it was originally designed. To prevent firms abusing the regime, the report recommended the FCA and HMT consider reforms to the regime with the aim of limiting its scope.
Currently, a principal firm that is authorised by the FCA to conduct regulated activities may appoint an unauthorised firm to carry on those regulated activities on its behalf as an appointed representative (AR). While there are certain limits of the types of activity that can be carried on by an AR, the regime allows firms that are not directly authorised by the FCA to carry on regulated activities. This approach has many benefits, not least cost efficiency and increased competition and innovation in the financial services market. However, there is growing concern that the manner in which the regime is being used has resulted in a higher risk of harm to consumers and markets.
HMT's CFE and the FCA's CP are intended to address these risks. The CP proposes changes to be made to the FCA's current AR regime which can be made without wider legislative changes. Meanwhile, the CFE aims to review the appropriateness and effectiveness of the current AR regime and seek information to determine whether wider legislative change is required.
The CP also contains a discussion chapter setting out the FCA's views on areas of potential policy change, such as changes to the regulatory hosting business model for principals. Such changes might include requiring principals to notify the FCA of their intention to provide such services.
Watch a recording of our webinar on the future of the AR regime here.
von mehreren Autoren
von Charlotte Hill und Daniel Hirschfield
von mehreren Autoren