FCA’s changes to the Appointed Representative Regime

In our recent webinar on the FCA’s changes to the Appointed Representatives Regime (which came into force on 8 December 2022), we had some really interesting questions from the audience

One question was asked in the context of the new required contractual terms that now are prescribed in SUP 12, in particular, the requirement that a principal must ensure that its written contract enables it to terminate its Appointed Representative (AR) arrangement if it is no longer able to adequately oversee the activities of its AR.

Question: If a contract is terminated by the principal, will the principal owe any fees to the AR, for example a claim for compensation for future revenues brought by the AR?

Answer: The answer to this question is not explicitly prescribed in the new rules and guidance. However, there are new rules and guidance on the respective responsibilities of the parties after termination, that may impact this issue: for example, the new rule that the principal must take all reasonable steps to ensure that if the termination results in the wind down of the ARs business, this is done in an “orderly way”.  Liability is therefore likely to depend on the precise contractual terms that are in place. For this, and for other reasons, both principals and ARs should consider their contractual arrangements. Amongst other things, parties should update their contracts so that they are better protected / not liable in the event of contract cancellation that is not their fault.

We set out some additional considerations on this topic in our live response below. Do contact us if you’d like a recording of the webinar.