The Financial Conduct Authority (FCA) expects implementing its appointed representative (AR) regime overhaul to cost the financial services sector around £7.6m per year.
It anticipates larger firms taking the highest expense with an average cost of £36,000 for large firms annually compared to an average of just over £2,000 across all firms.
The regulator revealed the figure in its policy statement on the new rules which force principals to take greater responsibility for their ARs and aim to prevent consumers being mis-sold to or mis-led by ARs.
According to the statement, the ongoing annual cost of the AR regime is estimated at £2.7m for all large firms and £7.6m across all firms, with the average cost per large firm estimated at £35,900 and £2,100 across all firms.
The FCA said it assumed that it would take on average one to two hours per AR for a member of the principal’s compliance team to handle notifications, annual review, and self-assessment. This assumes that changes are made to relevant systems, where needed.
As the average number of ARs across the large firms in scope was 330, the regulator added it expects that on average these functions would take approximately 70 working days.
