ICS were tasked with reviewing a brokers’ network of Introducer Appointed Representatives (IARs), primarily to ensure that they were not exceeding the limited role that an IAR can perform.
Initially this involved mapping all of the sources of business and creating a register showing key personnel within the introducer and their counterpart within the Principal firm. The task was completed by interviewing key staff within the introducer firm and also performing a detailed review of the following:
- The introducer agreements in place
- The websites of the introducers
- Marketing activity of the introducers
ICS reviewed activity against the actual agreements in place taking into account what activities the FCA Handbook and Regulated Activities Order permit an IAR to undertake. During the process we found examples of agreements being outdated or unsigned. Additionally, it was common to find that the correct regulatory disclosures were missing from marketing material and there were instances of IARs inadvertently going beyond their regulatory permissions. In 2022 it is clear that the FCA will focus on the Appointed Representative regime, and it is important that where such arrangements exist the Principal firm can demonstrate thorough and appropriate monitoring of all of its sources of business.