It could provide you with a new career launch pad or long-term career option that, if you work hard, takes your earnings to the next level and beyond.
Definition of an Appointed Representative
An Appointed Representative – or AR, for short – is an individual, or a firm, that operates within a regulated industry, where the FCA, or Financial Conduct Authority, is the regulatory body. Rather than being directly authorised by the FCA, the Appointed Representative (AR) acts as an agent for a firm that is directly authorised by the FCA. This firm is called an AR principal.
The principal and the AR work together through a written and agreed contract and the principal takes on the burden of regulatory compliance and offers a suite of other services, typically in exchange for a share of the commission returns that the Appointed Representative generates through insurance sales.
The principal is typically an established business within the insurance sector and able to provide the Appointed Representative with the benefit of its brand identity and reputation in the market. This is a real asset in itself, but other services that the principal typically provides include IT, back-office administration, handling of accounts and client monies, broking (if required) marketing and, of course, the all-important compliance.
ARs and FCA Regulation
As stated above, it is the AR principal that is responsible for ensuring compliance with FCA rules, although ARs need to fully understand what is expected of the business they run, in line with regulatory requirements. The AR is able to operate in this way, within the scope of the activities for which their principal has agreed to work with them. If they wish to offer regulated services beyond this scope, they need to gain their own authorisation from the FCA.
Given the importance of compliance, principals have to be given access to all records that demonstrate that activities are being conducted in the required manner. They also have to perform checks on the individuals and firms who become ARs, to ensure they are financially stable and competent.
ARs and the Treating Customers Fairly Outcomes
Principals are ultimately responsible for the products that ARs sell or arrange and the advice they give to customers, so take on the responsibility of ensuring that their ARs abide by and deliver the six outcomes that the FCA stipulates as forming the basis of ‘Treating Customers Fairly.’ In this respect, ARs are expected to perform no differently than directly authorised insurance brokers.
In this regard, ARs must make sure they are selling insurance products suitable for their customers’ needs, providing customers with clarity throughout the insurance sales process, offering relevant and suitable advice and delivering what the customer anticipated from the product sold to them. There should also be no barriers placed in the way of customers who may wish to alter their product, switch provider, make a claim or lodge a complaint.
Ongoing monitoring of Appointed Representatives
Any insurance salesperson who believes that they will escape scrutiny if they become an Appointed Representative is not being realistic. The regulations that the FCA expects to see upheld to the letter, require ongoing monitoring of ARs by the principal and a focus on their performance against KPIs. The principal also needs to have the means to assess the quality of the advice being given and is responsible for training and developing the AR, to help fill any gaps in performance.
This sums up the background to the role of an Appointed Representative, their responsibilities to their principal and the responsibilities that the principal has to the FCA.
If you have any further questions about life as an Appointed Representative, please contact Nigel Law on NigelLaw@GauntletGroup.com, call 07774 690436, or read our other articles and downloads. All conversations will be treated with strict confidentiality.