The UK government has published a policy statement about Appointed Representatives. An appointed representative carries on regulated activity under the responsibility of an authorised firm (the principal).
The government plans to preserve the Appointed Representatives regime in its current scope, saying that it will use targeted and proportionate reforms to support confidence in the use of Appointed Representatives so that businesses and consumers can benefit from the regime well into the future.
The policy statement points out that the Appointed Representatives regime plays an important part in the supply of financial services and provides substantial benefits to consumers and businesses. It supports innovation and competition by allowing firms to access financial services markets without the regulatory burden and cost of becoming authorised. It can help enhance the customer experience by enabling a range of non-financial businesses to offer complementary financial services alongside their core products.
However, there is concern that poor oversight of some Appointed Representatives is putting some consumers at risk. The government intends to address this concern and in its policy statement outlines two reforms that the government intends to make to the legislative framework for Appointed Representatives:
- Help prevent misconduct involving Appointed Representatives. Authorised firms wishing to use Appointed Representatives will need to first obtain permission from the FCA – this will enable the FCA to make sure that authorised firms have appropriate expertise and resources to effectively oversee their Appointed Representatives and ensure they act responsibly.
- Provide appropriate consumer protection when things go wrong. Consumers will be able to make a complaint to the Financial Ombudsman Service (FOS) if they are unable to resolve a dispute involving an Appointed Representative where the authorised firm is not responsible for the issue in dispute.
The proposed limited extension of FOS jurisdiction to Appointed Representatives set out in the statement will be designed and implemented to be consistent with the conclusions of the FOS review that was carried out earlier this year. The review was designed to stop the FOS acting as a quasi-regulator and ensure that the FOS is delivering its role as a simple, impartial dispute resolution service.
The government will consult on the details of these reforms in due course. Firms should look out for the consultation.
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