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FCA warns about network oversight of ARs across financial services

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  • 30/09/2020
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FCA warns about network oversight of ARs across financial services
The Financial Conduct Authority (FCA) has highlighted concerns with the way networks are overseeing their appointed representative (AR) firms across the financial advice industry.

 

While it has already taken action in the general insurance and asset management sectors, Mortgage Solutions understands the regulator’s concerns about networks’ risk management practices are not limited to just these sectors.

This could indicate the potential for further action to be taken in other areas to ensure networks are effectively monitoring their AR firms.

In its perimeter report issued yesterday the regulator said it had identified some potential risks with the principal-AR model, although these differed across the sectors in which the model is used.

The FCA noted it had already conducted thematic reviews of this process in the general insurance and investment management sectors in 2016 and 2019.

These reports “identified significant shortcomings in principal firms’ understanding of their regulatory responsibilities regarding their ARs, such as their role in oversight of ARs and the need to have controls in place over the regulated activities for which they have accepted responsibility”.

In these examples the firms could not consistently demonstrate they had effective risk management and control frameworks to identify and manage the risks arising from their ARs’ activities.

 

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