Enforcement case brings AR issues to the fore

May 2021

The FCA has published details of a long running enforcement case against a wholesale insurance broker, Alsford Page & Gems Limited (“APG”), for poor oversight of its Appointed Representatives (ARs), whereby extended warranties were sold to customers (including vulnerable customers) that did not meet their needs or they did not really want. Because of financial difficulty APG were only censured and its parent is making a restitution payment of £400,000 to affected customers – this is equivalent to the brokerage fees that APG made from selling the extended warranty insurance policies.

This case emphasises the point that the principal firm is responsible for ensuring customers were treated fairly by the Appointed Representatives and firms should not take on ARs where they have limited knowledge of the AR’s business model as they will not be able to adequately assess and monitor the AR’s conduct risks.

The FCA could make rule changes to reduce the potential harm to consumers posed by ARs. In the meantime, it is consulting on a new fee related to ARs whereby Principals will pay an additional fee of £250 per AR to raise £10m to fund more supervisory work in this area.

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