FCA Terminology (Jargon Buster)

An Appointed Representative (AR) is a firm or individual that carries out regulated activities under the responsibility of a directly authorised FCA firm (the ‘Principal’). The AR does not hold its own FCA authorisation but operates under the permissions and oversight of the Principal.

Becoming an AR can arguably provide a faster route to market for insurance intermediaries who wish to undertake regulated activities without applying for direct authorisation. This might be because they do not have sufficient resources to meet the FCA Threshold Conditions (which can include financial, people and other resources) or it might be because the senior managers do not have sufficient relevant experience. However, the Principal firm remains fully responsible for the AR’s regulatory compliance, systems and controls.

Firms considering an AR model should carefully assess:

• The contractual and oversight arrangements with the Principal
• Reporting and monitoring requirements
• The commercial (the Principal will likely pass on cost to the AR) and compliance implications of operating under another firm’s permissions

If you are exploring whether to become an appointed representative or to take on ARs as a Principal firm, you can read more on our Appointed Representatives page.

CASS refers to the FCA’s Client Assets Sourcebook, which sets out the rules governing how firms must hold and protect client money and assets. For insurance intermediaries, this is often referred to as the Client Money Sourcebook.

The rules are designed to ensure that client money is:

• Properly segregated from firm money
• Held in appropriately designated client accounts
• Subject to regular reconciliation and oversight

Failure to comply with CASS requirements can expose firms to significant regulatory risk and potential enforcement action. Firms must ensure that systems, controls and reconciliations are robust and appropriately documented.

A Compliance Monitoring Plan (CMP) sets out the structured programme of monitoring activity a firm undertakes to ensure ongoing compliance with FCA rules and guidance.

The FCA expects firms to establish, maintain and carry out a proportionate monitoring plan that reflects:

• The size and complexity of the business
• The nature of its regulated activities
• The risks inherent within its operating model
• It’s governance and oversight structure

An effective CMP typically includes scheduled file reviews, thematic checks, oversight of delegated activities and reporting to senior management.

Connect is the FCA’s online system used by authorised firms and applicants to submit applications, notifications and regulatory forms.

Insurance intermediaries use Connect to:

• Apply for FCA authorisation
• Notify changes to business structure, ownership or senior management
• Submit controlled function applications
• Communicate formally with the regulator
• Update the Directory

Accurate and timely submissions through Connect are essential, as failures or delays can impact a firm’s regulatory permissions or supervisory relationship.

The FCA’s Consumer Duty introduces enhanced standards of care requiring firms to act to deliver good outcomes for customers.

The Duty is supported by:

• A Consumer Principle
• Cross-cutting rules
• Four defined outcomes, including price and value, consumer understanding and consumer support

Firms must be able to evidence how their products, services and communications deliver good outcomes for their target market. Consumer Duty represents a significant shift in supervisory expectations and requires ongoing governance and oversight at board and senior management level.

For more detailed guidance, see our Consumer Duty Guidance page.

Under the FCA’s Consumer Duty framework, firms must ensure that their products deliver fair value to customers. Fair value assesses the relationship between the price paid by the customer and the benefits they can reasonably expect to receive from the product or service.

A product provides fair value where the total cost to the customer is reasonable relative to:

• The cover, benefits and services provided
• The target market for the product
• Distribution arrangements and remuneration structures

Firms are required to carry out and document value assessments, taking into account both product design, how the product is distributed (taking into account the services provided by other intermediaries in the chain) and ongoing performance. Where value concerns are identified, firms must take appropriate action to remedy them.

Demonstrating fair value is now a central component of FCA supervisory expectations and ongoing regulatory oversight.

The General Data Protection Regulation (GDPR) governs how organisations collect, process and store personal data.

Insurance firms typically process significant volumes of customer data, making compliance with data protection obligations essential.

Firms must ensure that:

• Personal data is processed lawfully, fairly and transparently
• Appropriate technical and organisational safeguards are in place
• Data retention and security controls are clearly documented

Although GDPR is enforced by the Information Commissioner’s Office (ICO) rather than the FCA, data protection failures can also create regulatory and reputational risks within the broader compliance framework.

ICOBS is the FCA’s Insurance Conduct of Business Sourcebook. It sets out the rules and guidance governing how insurance intermediaries and distributors must conduct their business and communicate with customers.

ICOBS covers areas such as:

• Pre-contractual disclosures
• Demands and needs statements
• Product information and transparency
• Claims handling standards
• Distance marketing requirements

Firms must ensure that their sales processes, documentation and customer communications align with ICOBS requirements. Ongoing oversight and monitoring are essential to demonstrate compliance.

Product Oversight & Governance (POG) refers to the systems and controls firms must have in place for the design, approval, distribution and ongoing management of insurance products throughout their lifecycle.

Under POG requirements, firms must:

• Identify a clearly defined target market
• Assess product risks and value
• Monitor product performance on an ongoing basis
• Review distribution arrangements

POG obligations apply to both manufacturers and distributors of insurance products and forms a core part of regulatory expectations under Consumer Duty and PROD.

Reg Data is the FCA’s regulatory reporting platform used by authorised firms to submit data returns.

Insurance intermediaries use Reg Data to:

• Submit periodic regulatory returns
• Provide financial and business performance information
• Complete specific reporting forms such as RMAR

Accurate and timely reporting through Reg Data is essential, as incomplete or incorrect submissions can lead to fines, supervisory engagement or enforcement action.

The Retail Mediation Activities Return (RMAR) is a regulatory return submitted via Reg Data by insurance intermediaries.

The RMAR provides the FCA with information relating to:

• Financial resources and capital adequacy
• Revenue and business mix
• Professional indemnity insurance
• Client money arrangements

The data enables the FCA to supervise firms’ financial resilience and operational performance. Firms must ensure that RMAR submissions are accurate, complete and supported by appropriate internal controls.

A Firm Reference Number (FRN) is the unique identifier allocated by the FCA to each authorised firm.

The FRN is used to:

• Identify firms on the FCA Register
• Submit regulatory returns
• Correspond with the regulator
• Provide confirmation of authorised status to customers and counterparties

Firms must ensure that their FRN is used correctly in regulatory communications and disclosures where required.

PROD 4 is the section of the FCA Handbook dedicated to insurance Product Oversight & Governance requirements.

It sets out the rules and guidance relating to:

• Product approval processes
• Target market identification
• Distribution arrangements
• Ongoing product monitoring

PROD 4 applies to both product manufacturers and distributors and is closely aligned with Consumer Duty expectations regarding customer outcomes and fair value.

FIN073 is a regulatory return submitted via Reg Data relating to financial resilience.

It replaced the FCA’s previous ad hoc financial resilience surveys and formalised reporting requirements into a structured return.

FIN073 enables the FCA to assess:

• Firms’ liquidity positions
• Capital adequacy
• Exposure to financial stress

Firms must ensure that FIN073 submissions accurately reflect their financial position and are supported by appropriate internal oversight and governance.