FCA rejects appointed rep ‘hosting’ plan from firm

The plan would have allowed AJCC to authorise Appointed Reps (ARs) to carry out regulated activities without the ARs being directly FCA approved.

This would have allowed AJCC to ‘host’ Appointed Representatives (ARs).

The ‘regulatory hosting’ model uses the FCA’s Appointed Representative (AR) regime. It means that rather than carrying on any substantive element of a regulated activity itself, the regulated business of the authorised firm makes its permissions available for use by its ARs. This service to the ARs is commonly marketed as an additional service alongside other compliance support services, the FCA said.

The watchdog said that AJCC could not demonstrate that it had the skills, experience or the staff to oversee ARs. It was also unable to describe a viable or sustainable business model. 

{loadposition hidden2}

AJCC was unable to explain how its ARs would assess that products or services were appropriate for consumers, or to demonstrate that it would have direct responsibility for the conduct and compliance of its ARs.

The FCA refused the application to “protect consumers from the risk of using a poorly overseen investment business.” 

The FCA has also reminded those providing ‘regulatory hosting’ services that they are accountable for the actions of their ARs and need to have the ability and skill to properly supervise them.

The FCA has previously highlighted common issues with oversight of ARs and committed to improving the standards in this sector as part of its 2022-2025 Strategy, the regulator said.

Emily Shepperd, executive director of authorisations at the FCA, said:”It is vital those who are seeking the FCA’s authorisation meet our high standards. If this is not the case, we will refuse their applications in the interests of consumers and other businesses.”

Alexander Jon Compliance Consulting has been asked for comment.

{loadmoduleid 444}