Compliance experts claim that there is still a place for ARs in P2P

A compliance expert has claimed that despite the crackdown by the city regulator, there is still a place for Appointed Representatives (ARs).

Mark Turner, managing director of Kroll’s financial services compliance and regulation practice, said many ARs follow the rules and operate in line with regulator expectations and will continue to “play a role to move forward.”

His comments come after some time examining the AR/Principal model.

In December, the Financial Conduct Authority (FCA) proposed tougher rules for the regulation of ARs after finding a “wide range of harms” for consumers.

Then, in April, the regulator created a new department to better oversee ARs and released its three-year strategy outlining its plans to “step up” oversight of principals to reduce “the most significant risks” of ARs.

Continue reading: Regulation: too much is never enough

As of February 26, 2021, Rebuildingsociety’s ARs have been banned from originating new loans after regulators raised concerns about the AR/Principal structure for peer-to-peer lending platforms.

Nonetheless, several crowdfunding platforms still operate as AR under the main ShareIn, including AxiaFunder, Energize Africa and LEO Crowdfunding and P2P lender Qardus.

Continue reading: FCA refuse to authorize new principal while AR cracks down

“The crackdown was driven by some key firms that failed to meet FCA expectations and also by some ARs who were implicated in various scandals, particularly in the area of ​​solicitation, marketing and the sale of inappropriate products,” Kroll’s Turner said.

“Such scandals have highlighted weaknesses in corporate governance and oversight by the main firms, which has undoubtedly been an important factor in FCA’s focus in this area.

“There are many ARs and principal firms operating in line with FCA’s expectations and they will continue to play a role going forward.”

Continue reading: Rebuilding Society Calls for More FCA Cooperation Amid AR Lending Ban

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