Over time, the AR regime has evolved to include a wider range of business models across sectors and markets. The consultation looks at the potential harm across this model and how to reduce it, with such harm being due to a lack of oversight by the principal.
Evidence shows that, on average, principals cause 50 to 400% more supervisory cases than non-principals. It also shows that cases are higher for non-principals across every sector.
The FCA proposals include:
- requiring principals to provide additional and more timely information on their ARs and how these are overseen
- clarifying and strengthening the responsibilities and expectations of principals
The potential harm that is being mitigated includes:
- ARs providing information which is misleadingly presented or difficult for consumers to understand, hindering their ability to properly assess products or services
- Products and services that are not fit for purpose in delivering the benefits that consumers reasonably expect, or are not appropriate for the consumers they are being targeted at and sold to
- Harm not being identified or acted on
- ARs acting outside the scope of their appointment. This can result in consumers not being able to access appropriate redress where only the regulated activities for which the principal has accepted responsibility are covered
Additional reporting and information collation is being proposed, including:
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Reporting timeframes
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Principals should notify the FCA of a proposed AR appointment. |
At least 60 calendar days before the appointment takes effect. |
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Principals are required to report to the FCA about any planned changes to the AR’s name or to the categories of regulated activities the principal allows the AR to use |
At least 10 calendar days before the change takes effect. |
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Verification and Reporting on Details of the AR |
All FCA-authorised firms are required to check the accuracy of their details on an annual basis, confirm where details remain accurate and report (SUP 16.10).
The FCA is proposing to extend this to cover the details of firms’ ARs, including the activities the principal permits them to conduct, as set out above. |
Annually
Principals would be required to check the accuracy of their AR details within 60 business days of their accounting reference date.
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Principals to provide complaints data on their ARs
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Currently, complaints data is reported to the FCA in aggregate for the principal and its ARs which is logged against the principal. The proposal would require principals to submit complaints data by AR.
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Annually |
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Principals to provide revenue information for their ARs
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Propose that principals submit revenue data for each of their ARs, from both regulated and non-regulated activities. For revenue from non-regulated activities, this should be split between revenue from non-regulated financial activity and non-financial activity.
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Annually based on the Accounting Reference date |
