FCA winds down Covid-related flexibility over ARs and the Approved Persons Regime

The FCA recently issued an update on what it expects of firms using Appointed Representatives (ARs) during the Covid-19 pandemic. Earlier this year, the regulator allowed some additional flexibility for firms using ARs. Now that firms have had some time to adjust to the impact of the pandemic, however, application of the rules will return to the status quo ante.

The modification by consent to the 12-week rule covering temporary arrangements for controlled functions remains available for now. But firms may not consent to the modification after 30 April. From that date on, all modifications previously consented to will come to an end. This effectively means the modification will not offer any additional flexibility for temporary appointments for approved persons made after 5 February.

Where approved persons have been furloughed by an AR, the FCA has confirmed that their approved status is unaffected and there is no need for them to be re-approved by the FCA when they return from furlough. The principal firm remains responsible for ensuring that approved persons within their ARs are fit and proper.

The FCA’s previous suspension of the rule requiring firms to notify it of  temporary arrangements has now expired (as of 7 January), and notification is required as normal again now. The FCA has said it does not need to be notified of any temporary changes prior 7 January, although it expects any such arrangements to have been clearly documented internally and be available for review should the FCA require this.

The regulator has also reiterated that principal firms need to continue ensuring that:

  • the controllers, directors, partners, proprietors, and managers of any ARs they use to carry on regulated activity are fit and proper
  • ARs are solvent and suitable to act for the firm
  • the principal firm has adequate controls over ARs’ activities
  • the appointment of any AR does not prevent the principal firm from satisfying and continuing to satisfy the threshold conditions
  • the principal firm is able to monitor and enforce compliance with relevant requirements.

To learn more about this or any other compliance related issue contact our expert team on 01925 765777, or email us at info@ukgigroup.com.

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