UK lessors – LDF, Aldermore, Investec – came together with the Financial Conduct Authority, KPMG and law firm Addleshaw Goddard to explain the appointed representative route for commercial finance brokers.
An appointed representative (AR) is a business which is not authorised, but which has a contract with a firm – called ‘the principal’ – that allows it to carry on certain activities under the permission of the principal.
According to the FCA, the principal takes full responsibility for ensuring that the AR complies with their rules and meet their requirements.
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Susan de Mont, Director of Credit Authorisations at the FCA says: "Firms that undertake certain regulated activities can do so as appointed representatives, rather than seeking authorisation themselves. In broad terms this means the firm is not authorised, but has a contract with a ‘principal’ – another firm that is authorised. This allows an appointed representative to carry on certain regulated activities under the supervision of the principal.
"If your firm intends to become an appointed representative it is important that your principal has the correct permissions. They will also need to notify us that you will be its appointed representative.If you hold an interim permission for credit activities you must register to be an appointed representative before this lapses," she added.
Callum Stevenson, head of broker at LDF, says that one of the biggest advantages of Appointed Representative status for brokers is the freedom it gives them to focus on growing their core business.
Stevenson said: "Becoming an Appointed Representative is a way for brokers to ensure that their compliance burden is manageable in both time and cost terms, so that they can focus on their real strength – getting crucial finance to UK businesses. A huge number of businesses across the economy rely on commercial finance brokers as a vital conduit for funding, and demand is strengthening as the recovery gains momentum.
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By GlobalData"The Appointed Representative model has been a big success in other broker markets, and we believe it can have the same positive effects in our industry. The transition to full FCA regulation is going to be testing, but the market can certainly come through this period, overcome the challenge and thrive."
Read the full story in the next issue of Leasing Life magazine.
