Appointed Representative AR Principal Requirements | Due Diligence Audit Checklist and Questionnaire | Mortgage Conduct of Business MCOB | Template for FCA Applications and Authorised Firms

← Return to the Table of Content for all MCOB pages

Appointed Representative (AR) Principal Requirements

[IF YOU ARE NOT A PRINCIPAL FOR AN AR – PLEASE DELETE THIS SECTION]

The company is registered as a Principal for the below Appointed Representative (AR) Firms: –

Name of AR Firm: _______________________________      Date Became AR: _____________

Registered Address: _____________________________________________________________

Name of AR Firm: _______________________________      Date Became AR: _____________

Registered Address: _____________________________________________________________

Name of AR Firm: _______________________________      Date Became AR: _____________

Registered Address: _____________________________________________________________

An appointed representative (AR) is a firm or person who runs regulated activities and acts as an agent for a firm that is directly authorised by the FCA. The directly authorised firm is known as the AR’s ‘principal’ and is wholly responsible for their compliance with the FCA requirements and regulations. We understand that the FCA do not have any direct contact with the AR’s we are a Principal to and as such, we are wholly accountable for their ongoing regulatory compliance.

The company is committed to its responsibilities as a Principal and confirms that we have a written contract between ourselves and any AR’s represented by us, fully documenting the business arrangement and requirements. We confirm and understand that we are fully responsible for ensuring that the AR complies with both our rules and those of the FCA.

In the development of our written contract and contractual terms for an Appointed Representative, the company uses and complies with The Appointed Representative Regulations. For the purposes of contractual terms for AR’s, these regulations include, among other things, the prescribed requirements applying to contracts between firms and appointed representatives for the purposes of section 39(1)(a)(ii) of the Act.

These regulations make it a requirement that the contract between the firm and the appointed representative (unless it prohibits the appointed representative from representing other counterparties) contains a provision enabling the firm to:

• Impose such a prohibition; or
• Impose restrictions as to the other counterparties which the appointed representative may represent, or as to the types of investment in relation to which the appointed representative may represent other counterparties the appointed representative may represent other counterparties

Our written contract helps to ensure that: –

• All ARs understand and comply with the regulatory requirements relating to the business that they carry out
• All ARs understand that if they want to conduct any regulated activities outside of the documented scope, they must become authorised in their own right
• All ARs allow the company full access to their staff, premises and records so that we may carry out inspections, audits and the necessary checks to confirm and ensure compliance
• The checks and audits that take place with the AR firms are documented procedurally and are recorded for future reference
• We make and maintain sufficient checks on the AR firm or individual to ensure that they are financially stable and competent
• When we appoint an AR, we understand our responsibilities for:
  • the products they sell or arrange
  • any advice they give to customers
  • ensuring they deliver the six ‘treating customers fairly’ outcomes

As a Principal, the company ensures that we carry out close and continuous monitoring of our ARs. We use and review key performance indicators and ensure that regular contact and discussions are ongoing between ourselves and the AR.

Risk assessments are carried out based on our internal Risk Assessment Procedures and used to grade each AR as a business risk. This grade is then used to determine how frequently monitoring and audits are carried out.

17.4.1 Due Diligence for Appointing AR

The company is committed to ensuring that all Appointed Representative firms and individuals are competent, honest and fit for the purpose they are appointed to carry out. To this end, we utilise our own strict Due Diligence Audit Checklist and Questionnaire document prior to making any contractual agreement and also ensure that checks and referencing are completed to satisfy the Company’s on boarding and outsourcing procedures.

Any firm under consideration to be an AR for us are asked to evidence their financial stability and staff competency in accordance with the FCA requirements for the regulated activities that they will carry out. The below documents are requested, reviewed and copies retained prior to any contractual agreement commencing.

[Please add/delete as applicable to your firm]

During the due diligence checks, the AR firms are asked to provide (or agree to us obtaining): –

• The past 3 years’ financial accounts and all business bank statements for the same period
• Credit Checks and full identity background check on all company owners and/or Directors
• Business Plan for the coming 12 months
• Staff training program, workshop session plans and ongoing compliance training records
• Individual staff training records & competency assessments
• Most recent staff appraisal forms and feedback
• Proof of staff credit & background checks (where applicable)
• Staff qualifications, experience and skills for the regulated activities to be carried out

In addition to the standard due diligence checks and procedures, we also follow our Risk Assessment & Management Procedures for new business relationships and review and assess any risks (internal and external) that a proposed AR has on our firm and our customers. These risks are assessed against our Risk Matrix and enable us to set an appropriate review and monitoring program for each AR based on their risk score.