An Appointed Representative is a firm or person who runs regulated activities in the UK by acting under a firm who is directly authorised by the Financial Conduct Authority (FCA). This is a contractual agreement in which the principal firm must take full responsibility for ensuring that the AR complies with relevant regulations.

Principal Firms must make sufficient checks on the firm looking to become an Appointed Representative (AR) to make sure they are financially stable and competent in performing regulated activities.

The Principal firm is responsible for its AR’s services and products, and must ensure the delivery is made in compliance with the Principal firm’s requirements. To this extent, the Principal will be involved in setting up the compliance infrastructure of the AR and provide the AR with the appropriate support in addition to the monitoring required from the Principal.

The timescale for undertaking regulated activities is much shorter than a full FCA Application which usually takes between 6-12 months if there are no complications or errors in the initial application. With Laven’s Regulatory Hosting platform, we see the majority of clients undertaking regulated activities within 1-2 months.

Using a reputable Regulatory Hosting platform should allow firms to access the market in confidence without the time-consuming process of a full authorisation. Working with a Regulatory Hosting platform, platform clients can get compliance and risk support from their principal’s in-house compliance team which reduces their own compliance burden and allows them to focus on their core business activities.

It is in the Hosting Platform’s best interest to make sure the platform client is compliant with all relevant regulation as the principal firm takes on the responsibilities and obligations for regulatory matters.

There is also an operational advantage for start-up firms as Regulatory Hosting Platforms give platform clients access to a firm’s established compliance framework. For instance, with Laven, this includes our best-in-class RegTech solution which can be transposed to allow a smooth transition from a compliance perspective if your firm decides to become fully regulated.

Even though you are not reporting directly to the regulator, it is still necessary for you to understand and comply with the regulatory requirements for the business you do. It is also important to stay within the scope of the permissions your principal firm have agreed for you to undertake and that you facilitate the principal firm’s regular checks as they need to ensure AR’s remains compliant, financially stable and competent to carry out its activities.

ARs are not authorised or regulated by the FCA; it is the principal firm that is responsible for making sure the AR’s activities comply with the relevant regulations otherwise the principal firm could be liable. However, principal firms must notify the FCA when it intends to appoint a new AR. AR firms appear under the principal firm’s financial services register profile and obtain a firm identity number. It is important that the principal firm and the AR have a good working relationship and communicate regularly.

The principal firm’s is required to collect a set of documents that will conclude whether the principal firm is able to register a firm as an AR. The AR is required to give the principal firm the following documents:

• A regulatory business plan;
• A Business continuity plan (Laven provides you with a template);
• Financial Projections (Laven provides you with a template);
• The ownership structure chart showing all beneficial owners;
• Details of Professional Indemnity Insurance (PII) or otherwise, confirm you wish to be connected to a PII provider.

For any approved persons (i.e. directors/partners and those who will be performing regulated activities), you will need to provide:

• Certified proof of address;
• Certified proof of ID;
• An updated CV detailing your employment up to 5 years (with any gaps of more than 1 month explained);
• References contact details; and
• A list of directorships you have held in the past 10 years.

As an appointed representative under Laven’s Regulatory Umbrella, we would support you with the preparation, collection and storage of these documents.

Before you commence the marketing activities in the EU, you will have to ensure that the fund manager (AIFM) of the fund has complied with the local registration rules in each EU member state where your targeted investors are based in. Should your target market consist of professional investors/institutions, you may use local registration rules which have mainly been derived from the National Private Placement Regime (NPPR). Laven Hosting cannot support you directly with such registrations but can connect you to its large network of consultants and lawyers who may be able to assist.

Our Regulatory Platform only covers UK regulated activities. The MiFID passport rights of all UK firms have been discontinued following the end of all Temporary Regimes agreed post-Brexit. However, not every activity that is regulated in the UK is equally as regulated in other EU member states. We will do our best endeavours to provide you with the guidance known to us, however may not be able to cover your activities outside of the UK.

No, these activities are not available to appointed representatives and not supported by our Regulatory Hosting Platform.

The main benefit of becoming an Appointed Representative is being able to access the market whilst avoiding the time-consuming and costly process of seeking regulation in the UK and then having to maintain ongoing compliance systems and responsibility. Your host will maintain all the necessary compliance and risk oversight, and where applicable, provide any seconded investment managers with investment process infrastructure and regulatory framework to perform their activities. This includes meeting obligations such as filing periodic reports and notifications to the FCA, and protecting investors. 

Working with Laven, firms will also gain access to the Leo Compliance Platform – our favoured choice of compliance system for keeping our processes, and yours, efficient and robust.