How FCA network reforms could impact firms

Reforming networks’ appointed representative models is high on the Financial Conduct Authority’s agenda this year, and it’s been a subject of much controversy since the publication of the watchdog’s consultation in March.

According to the FCA, networks generate between 50 and 400 per cent more complaints and supervisory cases on behalf of themselves and their members than firms which are not networks.

This led the watchdog to conclude more issues arise from principals and ARs than they do from directly authorised firms. Hence, it deemed a change to the AR regime - introduced back in 1986 - was needed.

The FCA has said under new reforms, it would require networks to self-assess each member firm on an annual basis. Adviser trade body Pimfa has since said this will turn networks into “nothing more than extremely well-paid human resources consultants”.

Ruby Hinchliffe, Senior Reporter at FTAdviser, spoke with Rory Gravatt, head of distribution and product strategy at Altus, and a former employee of Sesame Bankhall Group and Tenet, which operate AR models, to understand how networks will grapple with these changes.

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