Appointed representatives and networks

Principals often have networks of appointed representatives (ARs). Find out how to control your networks to reduce risks to your business.

As a principal firm, we expect you to have the right procedures to effectively monitor and control your business and networks of ARs in line with our requirements.

By 'networks' we mean:

firms with 5 or more AR firms, or
ARs that have 26 or more individual advisers between them

We refer to these firms as network principal firms. As your firm adds more ARs to its network, you could face risks such as preserving cash flow or maintaining satisfactory controls. Use this guidance to spot potential risks.

Know your business

When your firm submits its annual reporting on RegData, this should demonstrate that you have the right monitoring and controls in place.

You're responsible for the sales your ARs make. You need to be satisfied that your ARs are offering sound advice and treating customers fairly.

Gather evidence

Gather evidence for your compliance monitoring to show how this is happening. This could include, for example:

observed sales and advice sessions between your AR's staff and customers
file reviews

You should also produce and make use of management information to help you identify trends and manage risks to the network, its ARs and its customers.

Examples of this could include collating, analysing and acting on:

sales of particular products and provider spread
complaints data
policy claims that are refused by insurers (particularly relevant for general insurance firms)

The amount and quality of information you collect needs to reflect the business your firm does, help you identify risks, and help you manage these risks.

Have a clear reporting structure

Having a clear reporting structure within your firm, so that you and your AR know who is responsible for what, will help your monitoring.

Make sure that between you and your ARs there are:

clear reporting lines
clear information flows
defined roles and responsibilities

Every year you need to check the accuracy of the details of your ARs (including introducer ARs[1]).

To confirm that their details are up to date:

find out how to report AR data[2] to us

To report changes:

submit an ‘appointed representative or tied agent – change details’ form on Connect within 10 business days of making the changes

From December 2023, you'll need to report information on your ARs' complaints and revenue within 60 business days after your Accounting Reference Date (ARD).

If more firms join your network

You must notify us 30 calendar days before recruiting a new AR[3].

As you'll be increasing the size of your network, you should be able to identify and manage any risks or issues this could bring to your business. This includes having adequate systems and controls in place to manage the onboarding and monitoring of new ARs.

Be vigilant for what we call ‘phoenix firms[4]’ – firms that may seek to join your network as an AR as a way back into the industry once they have left behind liabilities in their previous guise.

Budgeting

Budgeting needs careful consideration. You must maintain adequate, competent resource to monitor your ARs effectively to ensure they meet our requirements and treat customers fairly.

A blanket cost-cutting across your network could introduce risks. It's better to identify the benefits and risks of any cuts and then carefully manage the processes to make sure what you do leaves your business financially viable in the long term, with key skills and processes still in place.

Responsibilities for your network

As a network principal firm, you're responsible for:

Monitoring

Monitor your ARs on a regular basis to make sure they remain competent and financially stable.
Make sure your own business and that of all your ARs meet our requirements.

Professional indemnity insurance

Make sure adequate and continuous professional indemnity insurance cover is in place to cover any liabilities that may arise from your network.

Keeping us informed

Make sure you keep us informed of who your ARs are and that, where appropriate, you gain approval for all individuals holding governing controlled functions within your AR before they begin regulated activity.

Monitor your ARs on a regular basis to make sure they remain competent and financially stable.
Make sure your own business and that of all your ARs meet our requirements.

Make sure adequate and continuous professional indemnity insurance cover is in place to cover any liabilities that may arise from your network.

Make sure you keep us informed of who your ARs are and that, where appropriate, you gain approval for all individuals holding governing controlled functions within your AR before they begin regulated activity.

Questions to help spot risks

You should be asking yourself these questions to help your firm identify any risks as soon as possible.

Do you have:

enough cash flow to meet liabilities as they fall due?
a cost-management process to identify both the benefits and risks of any cost-cutting exercise?
a clear internal structure so your people know who is responsible for what?
systems and controls in place that ensure close and continuous supervision of your ARs?
the right people with the skills and competence to carry out those roles, especially governing and control functions?
enough evidence to satisfy yourself that your ARs are offering sound advice and treating customers fairly?
a regular review of your management information to ensure that it remains relevant?

15/12/2022 : Editorial amendment Updates to page features for website refresh

03/08/2022 : Information changed Page updated following publication of Policy Statement PS22/11: Improvements to the Appointed Representatives regime

First published: 05/08/2015 Last updated: 19/07/2023 See all updates