Of relevance to:
Firms accepting business from unauthorised introducers
“Introducing” is one of those problematical activities that can either fall outside FCA regulation or fall inside FCA regulation depending upon the particular circumstances – in the latter case this would involve the regulated activity of ‘arranging deals in investments’.
One of the exemptions available – as in ‘introducing’ falling outside of regulation – comes from section 33 of the Regulated Activities Order which includes, but is not limited to, a requirement that the introduction is made with a view to the provision of independent advice or the independent exercise of discretion in relation to investments generally.
Authorised firms that accept business from unauthorised introducers should take heed of the FCA’s concerns raised in a recent ‘FCA Regulation round-up’. The Regulator raised concerns over the increase seen in cases in which the introducer has had an inappropriate influence on how the authorised firm carries out its business, in particular where the introducer influences the final investment choice.
Areas of concern identified include:
- Introducers using the authorised firm’s firm reference number (“FRN”) without adequate control;
- Introducers presenting a referral to the authorised firm with e.g. an attitude to risk questionnaire etc. already completed;
- Authorised firms providing a limited advice process for those customers referred to them to facilitate their desired outcome, often with no direct contact with the customer themselves.
Those firms that accept business via introducers should refer to FCA’s dedicated web page on this subject and in particular the ‘Warning signs’ and ‘What you should do next’.