Networks told to monitor ARs better

The Financial Services Authority has told retail networks to improve the supervision of their appointed representatives.

This follows an FSA survey that found potential shortcomings in areas such as the level of compliance resources in principal firms, the quality of desk checks and field visits to check ARs’ compliance, the use of computer systems for monitoring ARs and how far networks operated a risk-based approach to monitoring.

The regulator is publishing a factsheet suggesting how networks can improve practice in three main areas: compliance and the approach taken to supervising ARs; admission to membership; documented procedures and management information.

Alison Hewitt, head of department at the FSA’s retail firms division, says: “We expect networks to apply appropriate controls on their ARs so they maintain the same standards as directly authorised firms in their dealings with customers. The factsheet is designed to help networks improve. We will be carrying out more work next year to monitor the position.”

Dale Knight, director of mortgages at Berkeley Independent Advisers, says: “The fact that the FSA is offering a system to networks shows it values the role they play. We’ve done more checks than a directly authorised firm would do. But the majority of networks will not have the same controls that established networks, such as BIA, have.”

The FSA survey involved visits to 15 networks carrying out a mix of investment business, mortgage and insurance mediation.