The City regulator has refused to authorise a would-be principal to protect consumers from the “risk of using a poorly overseen investment business” as it continues its crackdown on harm from appointed representatives (ARs).
The Financial Conduct Authority (FCA) has rejected Alexander Jon Compliance Consulting’s (AJCC) authorisation application to provide regulatory hosting services, so it cannot take responsibility for and oversee ARs.
The FCA said that AJCC could not demonstrate that it had the skills, experience or the staff to oversee ARs and was unable to describe a viable or sustainable business model.
AJCC was also unable to explain how its ARs would assess that products or services were appropriate for consumers, or to show that it would have direct responsibility for the conduct and compliance of its ARs, the regulator said.
The FCA also reminded principals that they are accountable for the actions of their ARs and need to have the ability and skill to properly supervise them.
“It is vital those who are seeking the FCA’s authorisation meet our high standards,” said Emily Shepperd, executive director of authorisations at the FCA.
“If this is not the case, we will refuse their applications in the interests of consumers and other businesses.”
In December, the FCA proposed tougher rules for the oversight of ARs after seeing a “wide range of harm” and “real risks of consumers being misled and mis-sold”.
More recently in April the regulator set up a new division to better supervise ARs and published its three-year strategy, which set out its plans to “intensify” its supervision of principals in order to reduce “the most significant risks” of ARs.