Background on Financial Conduct Authority (FCA)
The FCA is an independent body that regulates the financial services industry in the United Kingdom and was created under the Financial Services and Markets Act 2000 (FSMA). The FCA aims to promote efficient, orderly and fair financial markets through its 4 statutory objectives of maintaining:
- Market confidence
- Financial stability
- Consumer protection
- Reduction of financial crime
Why apply to be an Authorized Representative (AR)?
Under the AR regime, a firm will be provided with compliance oversight by a FCA regulated business.
This allows a firm to engage in certain regulated activities in the UK quickly and in a more cost-effective manner as compared to obtaining a full FCA authorization.
|5 Steps to Becoming an Appointed Representative (AR)|
|1. Decide which regulated activities you want to run and find a principal who is in that type of business;|
|2. Decide whether you want to be an AR or an introducer appointed; representative (IAR)|
|3. Think about how many principals you want – this will depend on the type of business you run and the type of customers you have;|
|4. Find out what contracts you need to have in place;|
|5. Your principal(s) must tell us of your appointment so the UK FCA can put this information on their register.|
Procedures to becoming an Authorized Representative
- To initiate the Appointed Representative application with the FCA, we will require the following details: Firm full name, Certificate of Incorporation (UK), principle place of business & contact details, phone, fax numbers and website address.
- Internal due diligence which will include structured interviews, questionnaires and review of documents such as resumes, business plans, and other relevant
- External due diligence which will include verification of references and background checks by qualified third parties for the approved person(s).
- On-boarding is expected to take around 6 – 9 months and will commence upon confirmation from the This time frame assumes that all client information is correct, promptly available, and that processing time by the FCA, Desfran and other third parties are as expected.
Key Provision and Requirements for UK FCA
- Registering the firm as an Authorized Representative
- Registering Approved Persons
- Current scope of the arrangement will be for marketing and introduction activities carried out by the UK entity in the
- Both Desfran and client agree to mutual
- A successful on-boarding process in terms of due diligence on the approved person, the client firm and the business/operating model.
- Providing a regulatory umbrella for activities carried out in the UK, and upon request specified activities in other EEA states via MiFid passport(s). Desfran does not advise on compliance and regulation outside of the UK, however we will be able to assist by introducing professional advisors.
- The client’s firm will be responsible for ensuring that the activities which fall outside of the AR umbrella are compliant with other regulations,e.g. Asia and/or European. The client firm may be required to engage an appropriate legal advisor to summarize these in an appropriate file note.
- The client firm is not authorized to undertake any retail business within its remit as an Authorized Representative.
- The client firm understands that only an approved person is authorized to engage in regulated activities.
- The client shall provide evidence of appropriate Professional Indemnity insurance.
(1) Promote client’s application to the Principal and the FCA
(2) Incorporate a UK Company
(4) Prepare the business plan, in accordance with principal’s requirements
(5) Locate qualified executive and non-executive directors (if needed)
(6) Locate qualified executive directors and traders/dealers (within reasonable time)
(7) Prepare necessary justifications to be submitted to the Principal
(8) Prepare the letter(s) to accompany the application, in the events that any exceptions may be requested, as applicable
(9) Guide clients in providing all the necessary documentation and certificates
(11) Work through the Principal firm to respond to FCA’s queries and suggestions on the behalf of our clients —a process which may take around 6 – 9 months to be completed (depending on the speed of our clients’ replies to us).