Related provisions for SUP 12.5.4
1 - 20 of 45 items.
If at any time a firm has reasonable grounds to believe that the conditions in SUP 12.4.2 R or SUP 12.4.6 R (as applicable) are not satisfied, or are likely not to be satisfied, in relation to any of its appointed representatives, the firm must:(1) take immediate steps to rectify the matter; or(2) terminate its contract with the appointed representative.
The FSA would normally expect a firm to carry out a check on its appointed representative's financial position every year (more often, if necessary) and to review critically the information obtained. An appropriately experienced person (for example, a financial accountant) should carry out these checks.
Consideration should be given, among other things, to the impact on the appointed representative's financial position of any debts owed to, or by, the appointed representative. Indicators that an appointed representative is experiencing financial problems may include failure to adhere to repayment schedules for any debts, failure to meet any other financial commitments or requests for advances of commission.
(1) A firm must not permit an appointed representative to hold client money.(2) The firm must take reasonable steps to ensure that if client money is received by the appointed representative, it is paid into a client bank account of the firm, or forwarded to the firm, in accordance with COB 9.3.49 R to COB 9.3.51 R.
A firm must take reasonable steps to ensure that each of its appointed representatives:(1) does not carry on regulated activities in breach of the general prohibition in section 19 of the Act; and(2) carries on the regulated activities for which the firm has accepted responsibility in a way which is, and is held out as being, clearly distinct from any of the appointed representative's other business:(a) which is performed as an appointed representative of another firm; or(b) which:(i)
The senior management of a firm should be aware that the activities of appointed representatives are an integral part of the business that they manage. The responsibility for the control and monitoring of the activities of appointed representatives rests with the senior management of the firm. Guidance is set out in SYSC 3 on delegation (for example, SYSC 3.2.3 G and SYSC 3.2.4 G) and in the Statements of Principle and Code of Practice for Approved Persons in APER (for example,
(1) Some of the controlled functions, as set out in SUP 10.4.1 R, apply to an appointed representative of a firm, other than an introducer appointed representative, just as they apply to a firm (see SUP 10.1.16 R). These are the governing functions and the customer functions (other than the investment management function) such as, for example, CF 21, the investment adviser function. As explained in SUP 10.1.16A R, SUP 10.1.17G (3) and SUP 10.3.2 G respectively:2(a) the effect
Firms should be aware that, under the approved persons regime, the firm is responsible for submitting applications to the FSA for the approval as an approved person of:(1) any individual who performs a controlled function and who is an appointed representative; and(2) any person who performs a controlled function under an arrangement entered into by any of the firm'sappointed representatives.Applications for approval should be submitted as early as possible since a person may
The rules and guidance in TC extend to any employee of the firm in respect of whom the relevant rules apply. For these purposes, an employee of a firm includes: (1) an individual who is an appointed representative of a firm; and(2) an individual who is employed or appointed by an appointed representative of a firm (whether under a contract of service or for services) in connection with the business of the appointed representative for which the firm has accepted responsibilit
1The effect of sections 20 (Authorised persons acting without permission) and 39(4) (Exemption of appointed representatives) of the Act is that the regulated activities covered by an appointed representative's appointment need to:(1) fall within the scope of the principal's permission; or(2) be excluded from being regulated activities when carried on by the principal, for example because they fall within article 28 of the Regulated Activities Order (Arranging transactions to which
Before a firm appoints a person as an appointed representative (other than an introducer appointed representative) and on a continuing basis, it must take reasonable care to ensure that:(1) the appointment does not prevent the firm from satisfying and continuing to satisfy the threshold conditions;(2) the person:(a) is solvent;(b) is suitable to act for the firm in that capacity;(c) has no close links which would be likely to prevent the effective supervision of the person by
In assessing, under SUP 12.4.2 R(a) and (b), whether an appointed representative or prospective appointed representative is solvent and suitable, a firm should determine, among other matters, whether the person is likely to be adversely influenced by its financial position in the conduct of the business for which the firm is responsible. This might arise, for example, if the person has cashflow problems and is not able to service its debts. Guidance for firms on assessing the
In assessing, under SUP 12.4.2 R (2)(b), whether an appointed representative or prospective appointed representative is suitable to act for the firm in that capacity, a firm should consider:(1) whether the person is fit and proper; guidance on the information that firms should take reasonable steps to obtain and verify is given in SUP 12 Annex 2; and(2) the fitness and propriety (including good character and competence) and financial standing of the controllers, directors, partners,
1If a firm proposes to appoint an appointed representative, but not to prohibit its appointment by any other principals (see SUP 12.5.2 G (3)), the firm should, in particular:(1) require, in the contract, that the appointed representative notifies the firm about other principals (see SUP 12.5.5 R (3)) and (2) unless the appointed representative is an introducer appointed representative:(a) take reasonable steps to check whether the appointed representative is already appointed
(1) 1A firm must not appoint a person as its appointed representative until it has entered into a written agreement (a "multiple principal agreement") with every other principal the person may have; but this does not apply to the appointment of an introducer appointed representative nor does it require an agreement with another principal which has appointed a person as an introducer appointed representative.(2) A firm must not unreasonably decline to enter into a multiple principal
1
Multiple principal agreement
Matter |
Explanation |
|
1. |
Scope of appointment |
The scope of appointment given by each principal to the appointed representative. |
2. |
Complaints handling |
The identity of the principal which will be the point of contact for a complaint from a client (referred to as the "lead-principal" in SUP 12.4.5D G to SUP 12.4.5E G). |
An agreement that each principal will co-operate with each other principal in resolving a complaint from a client in relation to the appointed representative's conduct. |
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The arrangements for complaints handling, including arrangements for resolving disputes between the principals in relation to their liability to a client in respect of a complaint and arrangements for dealing with referrals to the Financial Ombudsman Service. |
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3. |
The arrangements for approving financial promotion. |
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4. |
Control and monitoring |
The arrangements for the control and monitoring of the activities of the appointed representative (see in particular SUP 12.6.6 R (Regulated activities and investment services outside the scope of appointment) and SUP 12.6.7 G (Senior management responsibility for appointed representatives)). |
5. |
Approved person status |
The arrangements for making applications for approved person status (see SUP 10 (Approved persons)). |
6. |
Training and competence |
The arrangements for training and competence (see TC). |
7. |
Co-operation |
The arrangements for co-operation over any other issues which may arise from the multiple appointments, including issues which may damage the interests of clients dealing with the appointed representative and administrative issues. |
An agreement by each principal to take reasonable steps to ensure that it does not cause the appointed representative or any of its other principals to be in breach of their obligations to each other or under the regulatory system. |
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8. |
Sharing information |
The arrangements for sharing information on matters relevant to the matters covered under the multiple principal agreement and each principal's obligations under SUP 12.6 (Continuing obligations of firms with appointed representatives). |
An agreement that each principal will notify each other principal of any information which is materially relevant to the multiple principal agreement. |
1One effect of the multiple principal agreement is to introduce a 'lead-principal' concept in relation to complaints handling for the benefit of the client. For example, where the client has been given advice by an appointed representative who has two principals, and the advice could have led to a transaction being arranged with either principal, the client will know that he may pursue his complaint with (but not necessarily against) one of the principals. Whether he later decides
(1) 1Under the relevant Advising and Selling chapters of COB, ICOB and MCOB, the customer will receive details of how to complain to the appointed representative and, when a product is purchased, details of the complaints procedure for the product provider, insurer or mortgage lender.(2) Under DISP 1.2.9 R, a firm must among other things, supply a copy of its internal complaint handling procedures to the customer when it receives a complaint. In complying with DISP 1.2.9 R, a
Before a firm appoints a person as an introducer appointed representative, and on a continuing basis, it must take reasonable care to ensure that: (1) the person is suitable to act for the firm in that capacity (having regard, in particular, to other persons connected with the person who will be, or who are, directly responsible for its activities); and1(2) the firm is ready and organised to comply with the other applicable requirements contained or referred to in this chap
In assessing, under SUP 12.4.6 R, whether an introducer appointed representative or prospective introducer appointed representative is otherwise suitable to act for the firm in that capacity, the firm should determine whether the introducer appointed representative and those persons who will be, or who are, directly responsible for its activities are of sufficiently good reputation and otherwise fit and proper for that appointment. The firm should, as a minimum, verify the identity
If a firm has doubts that a prospective introducerappointed representative or other person is of sufficiently good reputation and otherwise fit and proper, the FSA will expect it to resolve those doubts before appointing the prospective introducer appointed representative. For example, if a firm is aware that a person's previous appointment as an introducer appointed representative or representative was terminated, it should take reasonable steps to find out the reasons for the
(1) Under section 19 of the Act (The general prohibition), no person may carry on a regulated activity in the United Kingdom, or purport to do so, unless he is an authorised person, or he is an exempt person in relation to that activity.(2) A person will be an exempt person if he satisfies the conditions in section 39(1) of the Act, guidance on which is given in SUP 12.2.2 G. A person who is exempt as a result of satisfying these conditions is referred to in the Act as an appointed
(1) A person must satisfy the conditions in section 39(1) of the Act to become an appointed representative. These are that:(a) the person must not be an authorised person, that is, he must not have permission under the Act to carry on any regulated activity in his own right (section 39(1) of the Act); (b) the person must have entered into a contract with an authorised person, referred to in the Act as the 'principal', which:(i) permits or requires him to carry on business of
As long as the conditions in section 39 of the Act are satisfied, any person, other than an authorised person, may become an appointed representative, including a body corporate, a partnership or an individual in business on his own account. However, an appointed representative cannot be an authorised person under the Act; that is, it cannot be exempt for some regulated activities and authorised for others.
A firm is referred to as a 'network' if it appoints five or more appointed representatives or if it appoints less than five appointed representatives which have, between them, twenty-six or more representatives. However, a network does not include:54(a) a product provider;4(b) a firm which markets the packaged products of a product provider in the same group as the firm and which does so other than by selecting products from the whole market;4(c) an insurer in relation to a non-investment
(1) The Appointed Representatives Regulations are made by the Treasury under section 39(1) of the Act. These regulations describe, among other things, the business for which an appointed representative may be exempt, which is business which comprises any of:(a) arranging (bringing about) deals in investments (article 25(1) of the Regulated Activities Order) (that is in summary, deals in a designated investment, funeral plan contract or right to or interest in a funeral plan);
(1) An introducer appointed representative is an appointed representative appointed by a firm whose scope of appointment must, under SUP 12.5.7 R, be limited to:(a) effecting introductions to the firm or other members of the firm's group; and5(b) distributing non-real time financial promotions which relate to products or services available from or through the firm or other members of the firm's group.5(2) The permitted scope of appointment of an introducer appointed representative
All rules in SUP 12 apply in relation to introducer appointed representatives except for:(1) SUP 12.4.2 R, SUP 12.4.5B R and SUP 12.4.5C, on the appointment of appointed representatives, which are replaced by SUP 12.4.6 R;5(2) SUP 12.5.6A R on required contract terms, which is replaced by SUP 12.5.7 R; and5(3) SUP 12.9.1 R (4) (Record keeping).5
(1) An introducer is an individual appointed by a firm or by an appointed representative of such a firm to carry out, in the course of designated investment business, either or both of the following activities:4(a) effecting introductions; (b) distributing non-real time financial promotions.(2) An introducer is not an exempt person under section 39 of the Act (unless he is also an introducer appointed representative) and hence cannot benefit from the exemption to carry on regulated
(1) A representative is an individual who is appointed by a firm or an appointed representative, to carry on any of the activities in (1)(a) to (c):54(a) advising on investments;5(b) arranging (bringing about) deals in investments;5(c) dealing in investments as agent.5(2) If a firm appoints an appointed representative who is an individual in (1), that appointed representative will also be a representative. The individual may need to be approved to perform the investment adviser
A firm must make the following records on each of its appointed representatives:(1) the appointed representative's name;(2) a copy of the original contract with the appointed representative and any subsequent amendments to it (including details of any restrictions placed on the activities which the appointed representative may carry on);1(3) the date and reason for terminating or amending its contract with the appointed representative, whenever such termination or amendment gives
The firm should also satisfy itself that:(1) the appointed representative is making and retaining records in accordance with the relevant record keeping rules in the Handbook, if these records are not maintained by the firm;(2) the appointed representative (other than an introducer appointed representative) is making and retaining records sufficient to disclose with reasonable accuracy the financial position of the business it carries on in its capacity as the firm's appointed
Firms are reminded that they should make and retain records in relation to any person who falls within the scope of the rules in TC or who performs a controlled function under an arrangement entered into by a firm or by an appointed representative. See SUP 10 and TC for the applicable record keeping rules.
(1) Regulations 3(1) to (3B) of the Appointed Representatives Regulations makes it a requirement that the contract between the firm and the appointed representative (unless it prohibits the appointed representative from representing other counterparties) contains a provision enabling the firm to:4(a) impose such a prohibition; or(b) impose restrictions as to the other counterparties which the appointed representative may represent, or as to the types of investment in relation
A firm should satisfy itself that the terms of the contract with its appointed representative (including an introducer appointed representative):(1) are designed to enable the firm to comply properly with any limitations or requirements on its own permission;(2) require the appointed representative to cooperate with the FSA as described in SUP 2.3.4 G (Information gathering by the FSA on its own initiative: cooperation by firms) and give access to its premises, as described in
A firm must ensure that its written contract with each of its appointed representatives:4(1) complies with the requirements prescribed in regulation 3 of the Appointed Representatives Regulations (see SUP 12.5.2 G);4(2) requires the appointed representative to comply, and to ensure that any persons who provide services to the appointed representative under a contract of services or a contract for service comply, with the relevant requirements in or under the Act (including the
(1) If the appointed representative is appointed to give advice on investments to private customers concerning packaged products, the firm should also satisfy itself that:(a) the contract requires compliance with the rules in COB 5.1 (Advising of packaged products)3; and(b) if the firm is a provider firm, the contract prevents the appointed representative from giving advice on investments to a private customer concerning the purchase of a packaged product which is not issued by
(1) 4A firm must ensure that, if appointing an appointed representative (other than an introducer appointed representative), to carry on any of the following regulated activities, its written contract prohibits the appointed representative from carrying on any of the specified activities as an appointed representative for another firm:4(a) any designated investment business for private customers: the prohibition must cover all designated investment business for private customers;4(b)
4The effect of SUP 12.5.6A R (1) is that, in relation to designated investment business with private customers, appointed representatives are restricted to one principal.(1) The effect of SUP 12.5.6A R (1)(a) is that, in relation to designated investment business with private customers, appointed representatives are restricted to one principal.4(2) The effect of SUP 12.5.6A R (1)(b) and SUP 12.5.6A R (1)(c) is that, in relation to regulated mortgage activities with customer, appointed
A firm must ensure that its written contract with each of its introducer appointed representatives limits the scope of the appointment to:4(1) effecting introductions to the firm or other members of the firm's group; and4(2) distributing non-real time financial promotions which relate to products or services available from or through the firm or other members of the firm's group.4
(1) A firm which appoints an appointed representative must complete and submit to the FSA the form in SUP 12 Annex 3 (Appointed representative appointment form) in accordance with the instructions on the form and not more than ten business days after the date the appointment takes effect.3(2) [deleted]3
A firm's notice under SUP 12.7.1 R should give details of the appointed representative and the regulated activities which the firm is, or intends to, carry on through the appointed representative, including:(1) the name of the firm's new appointed representative (if the appointed representative is a body corporate, this is its registered name);(2) any trading name under which the firm's new appointed representative carries on a regulated activity in that capacity;(3) a description
To contact the Authorisation and Approvals Department (Authorisation teams):(1) telephone on 020 7066 1000; fax on 020 7066 1099; or(2) write to: Authorisation and Approvals Department (Authorisation teams), The Financial Services Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS; or(3) email appreps@ fsa.gov.uk.
(1) Where there is a change in any of the information provided to the FSA under SUP 12.7.1 R, a firm must complete and submit to the FSA the form in SUP 12 Annex 4 (Appointed representative notification form) in accordance with the instructions on the form and within ten business days of that change being made or, if later, as soon as the firm becomes aware of the change. The Appointed representative notification form must state that the information has changed.3(2) [deleted
(1) As soon as a firm has reasonable grounds to believe that any of the conditions in SUP 12.4.2 R, or SUP 12.4.6 R (as applicable) are not satisfied, or are likely not to be satisfied, in relation to any of its appointed representatives, it must complete and submit to the FSA the form in SUP 12 Annex 4 (Appointed representative notification form), in accordance with the instructions on the form.3(2) In its notification under SUP 12.7.8 R (1), the firm must state either:(a) the
If either the firm or the appointed representative notifies the other that it proposes to terminate the contract of appointment or to amend it so that it no longer meets the requirements contained or referred to in SUP 12.5 (Contracts: required terms), the firm must:2(1) complete and submit to the FSA the form in SUP 12 Annex 5 (Appointed representative termination form) in accordance with the instructions on the form and no more than ten business days after the date of the decision
In assessing whether to terminate a relationship with an appointed representative, a firm should be aware that the notification rules in SUP 15 require notification to be made immediately to the FSA if certain events occur. Examples include a matter having a serious regulatory impact or involving an offence or a breach of any requirement imposed by the Act or by regulations or orders made under the Act by the Treasury.
If a contract with an appointed representative is terminated, or if it is amended in a way which gives rise to a requirement to notify under SUP 12.8.1R, a firm must take all reasonable steps to ensure that:(1) if the termination is by the firm, the appointed representative is notified in writing before, or if not possible, immediately on, the termination of the contract and informed that it will no longer be an exempt person for the purpose of the Act because of the contract
This chapter gives guidance to a firm, which is considering appointing an appointed representative, on how the provisions of section 39 of the Act (Exemption of appointed representatives) work. For example, it gives guidance on the conditions that must be satisfied for a person to be appointed as an appointed representative. It also gives guidance to a firm on the implications, for the firm itself, of appointing an appointed representative.
The chapter also sets out the FSA'srules, and guidance on these rules, that apply to a firm before it appoints, when it appoints and when it has appointed an appointed representative. The main purpose of these rules is to place responsibility on a firm for seeking to ensure that: (1) its appointed representatives are fit and proper to deal with clients in its name; and (2) clients dealing with its appointed representatives are afforded the same level of protection as if they had
The FSA has produced a leaflet entitled "Becoming an appointed representative" which provides a comprehensive summary of some of the main features of the appointed representative regime. You may download a copy of this leaflet from our website at http://www.fsa.gov.uk/pubs/other/factsheet_appointed.pdf.
In determining whether a firm has complied with any provision in or under the Act such as any Principle or other rule, anything that an appointed representative has done or omitted to do as respects the business for which the firm has accepted responsibility will be treated as having been done or omitted to be done by the firm (section 39(4) of the Act ).
1The purpose of the rules and guidance in this section is to ensure that, in addition to the notifications made under SUP 12.7 (Appointed representatives; notification requirements), the FSA receives regular and comprehensive information about the appointed representatives engaged by a firm, so that the FSA is in a better position to pursue the regulatory objective of the protection of consumers.3
(1) 1A firm must:(a) submit a report to the FSA annually, in the form of an amended copy of the relevant extract from the FSA Register, containing the information in (2);3(b) submit the report in (1) to the FSA within four months of the firm'saccounting reference date.(2) The report in (1) must contain a list of all the current appointed representatives of the firm as at the firm'saccounting reference date.(3) The report in (1) is not required if:(a) the firm has no appointed
1If a group includes more than one firm, a single annual appointed representatives report may be submitted on behalf of all firms in the group. Such a report should contain the information required from all the firms, meet all relevant due dates, indicate all the firms on whose behalf it is submitted and give their FSA firm reference numbers. The requirement to provide a report, and the responsibility for the report remains with each firm in the group. 2
The FSA uses various methods of information gathering on its own initiative which require the cooperation of firms:(1) Visits may be made by representatives or appointees of the FSA. These visits may be made on a regular basis, on a sample basis, for special purposes such as theme visits (looking at a particular issue across a range of firms), or when the FSA has a particular reason for visiting a firm. Appointees of the FSA may include persons who are not FSA staff, but who have
In complying with Principle 11, the FSA considers that a firm should, in relation to the discharge by the FSA of its functions under the Act:(1) make itself readily available for meetings with representatives or appointees of the FSA as reasonably requested;(2) give representatives or appointees of the FSA reasonable access to any records, files, tapes or computer systems, which are within the firm's possession or control, and provide any facilities which the representatives
In complying with Principle 11, the FSA considers that a firm should take reasonable steps to ensure that the following persons act in the manner set out in SUP 2.3.3 G: (1) its employees, agents and appointed representatives; and(2) any other members of its group, and their employees and agents.(See also, in respect of appointed representatives, SUP 12.5.3 G (2)).
(1) A firm must permit representatives of the FSA, or persons appointed for the purpose by the FSA, to have access, with or without notice, during reasonable business hours to any of its business premises in relation to the discharge of the FSA's functions under the Act.(2) A firm must take reasonable steps to ensure that its agents, suppliers under material outsourcing arrangements and appointed representatives permit such access to their business premises. (See also, in respect
A retail customer who has a right to cancel a distance mortgage mediation contractmay, without giving any reason, cancel the contract by serving notice on the firm, before the expiry of the cancellation period in MCOB 4.6.4 R either:(1) by serving on, or otherwise sending by post, notice to the firm's last known address, addressed to the firm, its appointed representative or on any agent of the firm with authority to accept notice on the firm's behalf; or(2) in accordance with
Where notice of cancellation has been served on a firm (or its appointed representative or agent), the firm must make and retain a record (which includes a copy of any receipt of notice issued to the retail customer and the retail customer's original notice instructions) for three years from the date when the firm first became aware that notice of cancellation had been served.
(1) GEN 4.3.1 R (Disclosure in letters to private customers) covers letters delivered by hand, sent by post and sent by fax and also electronic mail, but not text messages, account statements, business cards or compliment slips (used as such).(2) GEN 4.3.1 R (Disclosure in letters to private customers) applies in relation to letters sent by any of the firm's employees, which includes its appointed representatives and their employees.(3) Firms are likely to find it convenient to
In providing reasonable assistance under SUP 5.5.9 R, a firm should take reasonable steps to ensure that, when reasonably required by the skilled person, each of its appointed representatives waives any duty of confidentiality and provides reasonable assistance as though SUP 5.5.1 R (3) and SUP 5.5.9 R applied directly to the appointed representative.
Territorial application of the Principles
Principle |
Territorial application |
Principles1, 2 and 3 |
in a prudential context, apply with respect to activities wherever they are carried on; otherwise, apply with respect to activities carried on from an establishment maintained by the firm (or its appointed representative) in the United Kingdom unless another applicable rule which is relevant to the activity has a wider territorial scope, in which case the Principle applies with that wider scope in relation to the activity described in that rule. |
applies with respect to activities wherever they are carried on. |
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if the activities have, or might reasonably be regarded as likely to have, a negative effect on confidence in thefinancial system operating in the United Kingdom, applies with respect to activities wherever they are carried on; otherwise, applies with respect to activities carried on from an establishment maintained by the firm (or its appointed representative) in the United Kingdom. |
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Principles 6, 7, 8, 9 and 10 |
Principle 8, in a prudential context, applies with respect to activities wherever they are carried on; otherwise apply with respect to activities carried on from an establishment maintained by the firm (or its appointed representative) in the United Kingdom unless another applicable rule which is relevant to the activity has a wider territorial scope, in which case the Principle applies with that wider scope in relation to the activity described in that rule. |
applies with respect to activities wherever they are carried on.2 |