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Context
We are aware that the FCA has started to write to Principal firms in relation to overseas ARs, and that the FCA had written to the London & International Insurance Brokers’ Association (LIIBA) in relation to actions the FCA is proposing to take in relation to overseas AR (as the FCA’s planned communication to firms may impact LIIBA members).
Key points to note
- The FCA has been undertaking increased engagement with Principal firms as part of its three-year strategy to improve the oversight of ARs.
- The FCA’s Consultation Paper CP21/34 and Policy Statement PS22/11 set out some of the challenges Principals may face in effectively overseeing the activities of overseas ARs. As signalled in CP21/34, the FCA continues to consider its approach to such arrangements and is currently carrying out proactive work.
- The FCA has started to write to Principal firms who may have an AR operating overseas, the e-mail being in the form of a short ‘Dear CEO’ or Portfolio-style letter – no response is required.
- The letter sets out why the FCA is writing, its approach to the AR regime and overseas ARs, covers reviewing Principals’ relationships with their overseas ARs, sets out detail about changes to information about overseas ARs, and sets out a reminder of the FCA’s new Rules in relation to the AR regime and the Consumer Duty.
- The FCA expects Principal firms to:
- terminate relationships with ARs who are not carrying on regulated activity in the UK; an
- consider terminating dormant AR relationships, if appropriate; and to update the FCA’s records if their addresses are incorrect.
- The FCA also reminds Principal firms of the Consumer Duty, and its enhanced expectations as set out in PS22/11.
Next actions
If you have any questions or queries about the above, please contact ARDOverseasARQueries@fca.org.uk.