Principal firms must investigate the history of their appointed representatives (AR) including other principal firms they worked for and why their previous relationship came to an end.
The requirements are being introduced as part of the Financial Conduct Authority’s (FCA) overhaul of its AR regime.
Under the changes the FCA is requiring firms to provide the regulator with various data. This includes:
- The primary reason for the principal’s intention to appoint the AR
- The nature of the regulated activities the principal will permit the AR to undertake (primary and additional markets in which the AR will undertake regulated activity)
- Whether the AR will provide services to retail clients
- Whether the AR is part of a group. If so, to provide the name of the parent
- Whether any individuals from the AR will be seconded or contracted to the principal firm to carry on portfolio management and/or dealing activities, and if so to explain the rationale for entering into such an arrangement
- Whether the AR was previously an AR of a different principal, and if so, why the previous relationship was terminated
The FCA said it would require these items for new AR appointments and for existing ARs as part of a one-off exercise, to ensure that it has this data on the entire AR population.
The regulator is also requiring principal firms to notify it of changes in information they have given on their ARs.
The FCA revealed it received little or no feedback to the data requests when they were originally proposed in its consultation late last year.
