FCA writes to Principal firms about overseas Appointed Representatives

October 10, 2023

The FCA has been undertaking increased engagement with Principal firms as part of its three-year strategy to improve the oversight of Appointed Representatives. The FCA’s Consultation Paper CP21/34 and Policy Statement PS22/11 set out some of the challenges Principals may face in effectively overseeing the activities of overseas ARs.  As signalled in CP21/34, the FCA continues to consider its approach to such arrangements and is currently carrying out proactive work.

The FCA has now written to Principal firms who may have an AR operating overseas, the e-mail being in the form of a short ‘Dear CEO’ or Portfolio-style letter – no response is required.  The letter sets out why the FCA is writing, its approach to the AR regime and overseas ARs, and sets out a reminder of the FCA’s new Rules in relation to the AR regime and the Consumer Duty.  The FCA expects Principal firms to:

• terminate relationships with ARs who are not carrying on regulated activity in the UK; an
• consider terminating dormant AR relationships, if appropriate;
• and to update the FCA’s records if their addresses are incorrect.

The FCA also reminds Principal firms of the Consumer Duty, and its enhanced expectations as set out in PS22/11.

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