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FCA says networks need tighter control of ARs

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The FCA has warned networks must take more responsibility for the advice their appointed representatives give.

The regulator has also today highlighted the issues of improper introducer influence on regulated ARs, as well as ARs doing business they are not authorised to do.

The FCA warns that the choices and advice given by an AR can be “inappropriately influenced” by external firms introducing business to them.

The regulator says networks therefore need to have tight controls over their ARs and the introducers they use.

It adds: “Otherwise, it may result in the firm and its customers experiencing harm (e.g. as a result of a scam).”

The regulator is also concerned that some ARs use their firm reference numbers to do business they had not agreed with their network.

The FCA’s statement says: “There is therefore a risk that customers may be misled into believing that the AR has the authority to act because they have an FRN. As a result, a principal should be aware of all of the activities carried out by its ARs.”

The regulator also says some networks are not properly monitoring the type, volume and source of business being submitted by its ARs.

The FCA adds that principals should consider dropping ARs who have not submitted business or introductions for some time.

The FCA singled out the investment sector as an example, but says its warning is relevant to all principals and ARs “regardless of sector”.

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