Sentinel Regulatory Services news & information

Not the latest superhero movie but real life.

The press has recently reported that the FCA is cracking down on unregulated share offers, which are often made using social media platforms. The FCA is actively monitoring such platforms to identify activities that would ordinarily require FCA authorisation.

One such firm in the news is Odin, a business helping private companies to “pool investments” that has been instructed by the FCA to stop onboarding new clients until it changes its operating model. The firm disputes that it has infringed FCA rules and insists it has legal advice supporting its position. No doubt this dispute will be resolved in due course, but not without time, effort and reputational and monetary costs.

Where firms’ activities are on the margins of regulation, such disputes can be avoided using Sentinel’s Appointed Representative service, which provides the relevant regulatory permissions to mitigate such regulatory risks.

The Sentinel team has dealt with many prospective firms whose primary activities may not be regulated but which, from time to time, may carry on FCA regulated activities.  A typical case might be a US parented Private Equity firm’s London office performing due diligence and research into a UK industry sector which, on the face of it, is not a regulated activity. However, that office might be called upon to help arrange a deal, which is potentially a regulated activity. Most firms we meet take a conservative, risk averse approach to regulation and actively want to comply. However, a full direct FCA authorisation is expensive, time and resource consuming and probably overkill for their UK office. Instead, the Appointed Representative route offered by Sentinel offers cost effective flexibility and compliance cover for firms new to UK regulation.

Sentinel is FCA authorised so that its Appointed Representative clients may use Sentinel’s FCA permissions to ensure their regulated activities are covered. The rights, responsibilities and duties of both parties are set out in an Appointed Representative Agreement where both must ensure they remain compliant. Consequently, both develop a close working relationship. Moreover, this relationship can be established in 5 to 10 weeks, subject to a thorough vetting process, as opposed to the 6 to 12 months often required for direct FCA authorisation. Once appointed, the ongoing costs and regulatory burden are often much less onerous too.

Ian Manson, September 2024

Please contact Alex, Ian, or Lauren at Sentinel to discuss our Appointed Representative services.