HM Treasury (HMT) published a policy statement on the appointed representatives regime, setting out how it proposes to adjust the appointed representative (AR) legislative framework to provide further needed protection for consumers of AR firms. First, a new gateway for authorised firms will be implemented which will require an authorised firm that intends to use ARs to obtain permission from the Financial Conduct Authority (FCA) before doing so. The FCA's role will be to assess whether an authorised firm has the appropriate resources and expertise to properly oversee ARs. HMT states that it is already working with the FCA on a detailed proposal for designing and implementing the permission gateway. The intention is that the new gateway will not require existing principal firms to apply for the new permission and firms seeking a new authorisation will be able to apply for the permission during the authorisation process. The FCA will have powers to limit, vary, or revoke a permission to act as principal.
Secondly, HMT intends to mitigate consumer harm by closing a gap in the complaints redress system. Currently, consumers may make a complaint to the Financial Ombudsman Service (FOS) if they have an unresolved dispute with an AR firm relating to regulated activities for which the principal firm has accepted responsibility. However, the FOS may only investigate the principal firm and its responsibilities. If the complaint falls outside of those responsibilities the FOS has no jurisdiction to investigate the complaint. HMT proposes to revise the framework so that the FOS can investigate any complaint involving regulated activities carried on by an AR. The amendment to the FOS framework will be implemented to align with the outcome of HMT's review of the FOS which is detailed in HMT's consultation on modernising the financial redress system.
HMT confirms that is not intending to change the scope of the AR regime. Legislation will be laid to bring about these changes. Consultations on the FCA and FOS regimes will be carried out in the future, although timing is not yet known.
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