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CP159 to try a multi-principal approach

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  • 16/12/2002
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Intermediaries will be allowed to become Appointed Representatives (ARs) in the post-regulatory regi...

Intermediaries will be allowed to become Appointed Representatives (ARs) in the post-regulatory regime, but they will be tied to one ‘principal’ for each category of business they operate in.

The Financial Services Authority (FSA) said it will be adopting a ‘multiple principal’ approach, whereby intermediaries can have different principals in investment, insurance and mortgage business. However, certain restrictions will be imposed in the interests of consumer protection.

In its latest consultation paper (CP159), the FSA proposed ARs should have the same principal for groups of products that could be offered to the customer as alternatives,’ known as ‘substitutable product categories,’ so if problems occur it is clear which firm is responsible.

The FSA has identified 13 categories across the three industry sectors covered under the paper, one for investment business, two for mortgages and 10 for general insurance. The two mortgage categories are mainstream mortgages and lifetime (or equity release) mortgages.

However, if intermediaries operate in different categories they may be allowed to use different principals for each category, although a principal would be free to exercise its right to prohibit or restrict an AR from acting on behalf of other principals.

l See page 3 for more on ARs.


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