Appointed Representative vs Directly Authorised. The Difference
When I first joined the financial services sector there were hundreds of different acronyms that I really had no idea what they meant.
In this blog post I am going to go through some of the key terms that make up the financial services sector and also the major difference between a Directly Authorised entity and an Appointed Representative.
So let’s get into it:
The Acronyms
- Appointed Representative (AR): This can be either a person or a company that’s been appointed or authorised by a financial firm to represent their financial products or services in the market place. They essentially use the authorisation of a wider firm to deliver more financial products.
- Directly Authorised (DA): This is a firm or person that has gone directly to the Financial Conduct Authority (FCA) and has been authorised accordingly. They are responsible for their own compliance and regulatory obligations.
- Competent Adviser Status (CAS): This is given to an adviser who has shown they have both knowledge, qualifications, skills and ethics to provide financial advice to clients without the need for direct supervision.
- Non Competent Adviser Status (NCAS): This is where all financial advisers will start, a trainee and heavily supervised. This is where financial advisers are still learning the financial advice process and through a combination of training, coaching and case reviews, the goal is to get the adviser to CAS status.
- Registered Individual (RI): A registered individual is a person who has been formally approved by a regulatory body, in the case of financial services, this will most likely be the Financial Conduct Authority or the Prudential Regulation Authority to perform a specific regulated financial activity.
Certificate in Mortgage Advice & Practice (CeMAP)
The major qualification within the mortgage industry is acquiring your CeMAP (Certificate in Mortgage Advice & Practice). It is illegal to advise on mortgages without a qualification or authorisation from the Financial Conduct Authority.
Mortgages are a highly regulated financial product and as such require strong levels of both regulation, supervision and authorisation. Advising on mortgages without the necessary qualifications or authorisations from the FCA is a serious breach of the Financial Services & Markets Act 2000 (FSMA).
Once you have acquired your CeMAP most new advisers will be looking to obtain their CAS. This is done by applying for a role at an authorised financial firm, typically will be called the firm principal.
The difference between an Appointed Representative (AR) and a Directly Authorised (DA) firm
The major difference between the two types, from a marketing position, is that as an AR you will be operating under the authorisation of the Firm Principal.
In other words all of your marketing material will need to be audited and approved by the compliance team before being released.
You will also have to follow the firm principals advice process for all product areas.
Whilst a Directly Authorised firm is essentially a company that holds its own permissions with the FCA. They are ultimately responsible for ensuring all of their marketing meets industry standards, regulations and ethics.
They have, quite simply, gone to the FCA for their authorisation, rather than going to another financial organisation like a network.