According to the FCA’s annual report, there were around 35,000 ARs, including introducer ARs (IAR) in 2022 and 2023, which is down from 43,000 in 2020.
The regulator added that its supervisory interventions last year and in March this year had seen principals terminating relationships with 153 ARs and 618 IARs.
“While complaints for both 2021 and 2022 show an improved position for principal firms, compared to the published baseline, principal firms and their ARs still generate more complaints than non-principal firms overall,” it added.
The regime was introduced in 2022 and included rules around increased oversight, risk monitoring, information submission and review.
In its report at the time, the regulator estimated that the changes to the AR regime would cost all principal firms around £7.6m, and £2.7m for all large principal firms.
The FCA added that over half of principal firms surveyed for its practitioner panel survey thought that oversight of AR firms had improved.
It added that improving principals’ understanding of their obligations is central to its strategy and it had written to over 3,000 principals on the new rules.
The regulator has also collected new and comprehensive data covering the 35,000-strong sector, including data on business, revenue, complaints, reasons for appointment and financial arrangements between principals and ARs.
Lifetime mortgages
The report also confirmed that it was following up on its findings of “poor advice” in the lifetime mortgage market.
It explained that later life lending advice was “significant” and could have a “potentially lifelong impact for customers”.
The findings, which came out in 2020, were “mixed” with lifetime mortgages working well in some instances. However, the regulator identified cases where it was “not clear that the advice was in the best interests of the consumer”.
The three areas of concern were insufficient personalisation of advice, insufficient challenging of customer assumptions and lack of evidence to support the suitability of advice.
The FCA said: “We are assessing the quality of advice consumers get from a sample of firms. We will intervene to drive up standards.”
