Appointed Representatives SUP 12 | Monitoring and Onboarding Procedures | Mortgage Conduct of Business MCOB | Template for FCA Applications and Authorised Firms

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Appointed Representatives (SUP 12)

The company ensures that any relationships and contractual agreements made with Appointed Representatives (AR’s) to carry out regulated activities on the firms’ behalf, are done so in accordance with the rules and regulations contained in FCA Handbook SUP 12 Module.

We understand and confirm that prior to appointing an individual or firm as an appointed representative (other than an introducer appointed representative) and on a continuing basis, we will always establish on reasonable grounds that: –

• The appointment does not prevent the company from satisfying and continuing to satisfy the threshold conditions
• The person or firm:
  • is solvent
  • is otherwise suitable to act for the company in that capacity
  • has no close links which would be likely to prevent the effective supervision of the person by the company

We also confirm that the company: –

• Has adequate controls over the AR’s regulated activities for which we have responsibility
• Resources to monitor and enforce compliance by the AR person or firm with the relevant requirements applying to the regulated activities for which we are responsible and with which the AR is required to comply under its contract with us
• Are ready and organised to comply with any other regulatory requirement and/or rule as set out in SUP 12 of the FCA Handbook

17.5.1 Appointed Representative Monitoring Procedures

As the principal firm, we understand that it is our responsibility and obligation to ensure the compliance and integrity of any appointed representatives with whom we work. We therefore employ rigorous standards and programs of AR audits and monitoring to ensure close and continuous supervision and review of all appointed representatives.

[If you already have your own procedures for monitoring and auditing AR’s, please insert them below – alternatively, if you are using the KYC steps below, please ensure that you edit/add to these procedures as applicable to your firm]

1. After the initial on-boarding and due diligence checks have been completed and the AR is given a risk assessment score, they are assigned a category for ongoing monitoring and audits
2. Individual Key Performance Indicators (KPI’s) are developed for the AR in accordance with their role, services and monitoring category
3. Audit Checklists, KPI Targets and Audit Procedures are used to monitor & review the below category areas
4. Management Information is recorded and disseminated based on the audit and monitoring results

The company understand and complies with the FCA requirement that a business cannot be an appointed representative for a regulated activity if: –

• it does not have a contract with a principal firm covering its regulated business
• its principal firm has not accepted responsibility in writing for the regulated activity the business undertakes
• the firm that the business wants to act as its principal holds only an interim permission for the relevant credit activity
• it operates a credit reference agency
• it provides credit (unless the credit is free of interest and any other charges)
• it is authorised for another activity

However, we do note that a firm with interim permission for a credit activity may also be an appointed representative for an activity regulated under the Financial Services Markets Act that is not covered by its interim permission and a firm with limited permission for certain credit activities will be able to be an appointed representative for other regulated activities, e.g. a motor dealer with limited permission to carry on credit broking can also be an appointed representative insurance intermediary.

17.5.2 Insert: Appointed Representative Agreement

[If you are a Principal for one or more ARs, you should insert a copy of your standard written contract or agreement here]

17.5.3 Insert: Appointed Representative On-boarding Procedures

[If you are a Principal for one or more ARs, you should insert your AR Due Diligence & On-Boarding Procedures here]

Other sections in this manual that relate to disclosures and requirements for ARs are: –

• Status Disclosure Statement – Content denoting the AR, LP or FP requirements for the disclosure statement on all materials, content and website/s
• Statutory Status Disclosures – List of disclosure requirements for client communications, promotion materials and website content
• General Disclosure Notes – FCA notes for alternative firms (inc. AR, incoming firms with & without a top-up)
• Distance Marketing – Audit checklist covering the requirements of CONC 2.7 and COBS 5.1 as well as the Consumer Credit (Disclosure of Information) Regulations 2010
• Financial Promotions & Client Communication – Audit checklist covering the requirements of CONC 3.3