The Financial Conduct Authority has set out good practice and areas for improvement to help principal firms monitor their Appointed Representatives (ARs). Self-assessments, annual reviews and onboarding processes were three of the key areas under the spotlight, with the FCA highlighting them as common areas where principals are not demonstrating effective practices.
The report comes nearly two years after the FCA introduced its new rules and enhanced expectations for principal firms (effective from 8 December 2022).
Of the 270 firms tested as part of the review, it was found that 1-in-5 had not done the required checks relating to self-assessments and annual reviews. It also found that most principals have retained their onboarding and termination procedures that were in place prior to the FCA’s changes in 2022.
Within the report are examples of good practice and areas for improvement for:
- Self-assessments
- Annual reviews
- Monitoring, oversight and acting out of scope
- Approach to onboarding ARs
- Termination, offboarding and orderly wind-down
All members that currently – or intend to – work with ARs are encouraged to read the findings and consider how their internal processes compare.
Read the review: Principal firms embedding the new rules for effective appointed representative oversight: Good practice and areas for improvement
