Read more about the challenges and expectations for principal firms with overseas appointed representatives (OARs).
Challenges for principals with OARs
Feedback to our consultation on improving the appointed representatives regime (PDF)[1] showed that principals may have challenges overseeing and communicating effectively with their OARs due to:
- differences in legal, accounting and regulatory requirements for each jurisdiction
- geographical distance
- cultural and language differences
Expectations for principals with OARs
We expect monitoring and oversight of OARs to account for any extra challenges that may arise as outlined above.
Principal firms should consider whether customers dealing with an OAR will receive equivalent services, protections and outcomes as those dealing with UK-based appointed representatives (ARs).
If not, firms should make sure customers are given suitable information to alert them to any differences.
Principals must also establish on reasonable grounds, on a continuing basis, that the activities of their OARs do not result in undue risk of harm to consumers or market integrity.
Practical considerations for principals with OARs
- When completing your annual self-assessment document, you should consider the additional risks of having OARs when assessing your controls and resources as per SUP 12.4.2(3)[2].
- The application of the approved persons regime to OARs (including individuals within OARs performing a customer function) depends on, among other things, whether the activities are carried on from an establishment in the UK and how long individuals performing a customer function spend in the UK annually. See SUP 10A[3] for more information.
- You must also ensure that AR agreements require your OARs to comply with relevant rules (SUP 12.5.5R[4] and including, for example, the communication requirements in GEN 4.4.1R[5]).
If you cannot adequately monitor the activities of an OAR, or if it does not carry on regulated activity in the UK, you should consider terminating the agreement.
You can notify us of any terminations (and other AR updates, including to addresses) by submitting the relevant form on Connect[6].
Read more about your responsibilities as a principal firm[7].
Preventing harm from OARs
We continue to use data to inform our approach, including whether any targeted supervisory engagement with principals with OARs is needed in future.
