Sentinel Regulatory Services news & information

We are often asked by prospective Appointed Representatives (“ARs”) what the relationship involves and how directly Sentinel will be involved in their day-to-day business. In some cases, such as incoming overseas firms, the prospective AR is entirely unfamiliar with FCA regulation, so it is potentially an even more daunting challenge. However, as explained below, Sentinel has a vested interest in ensuring its ARs remain compliant, so is on hand to advise, monitor and supervise your conduct during the relationship.

Sentinel is deemed “the Principal” in the relationship with its ARs and their staff. The FCA’s rules require that Principals retain full responsibility for their ARs’ conduct, which is reinforced further by the fact that ARs’ clients are also considered to be their Principal’s clients. Finally, the relationship is formalised by an Appointed Representative Agreement and all parties are registered and recorded on the FCA’s public register. Thus, by these requirements, agreement and obligations, Sentinel must ensure its ARs conduct their business in a compliant manner at all times. Sentinel expects open dialogue with its ARs and full disclosure of any issues or matters that might impact effective compliance. This way, Sentinel develops a clear understanding of the AR’s business, its governance and compliance culture.

How does this relationship play out on a daily basis? Does Sentinel require a seat on the AR’s board? Is Sentinel directly involved in investment activity? The short answer to both questions is “no”. Sentinel does not require active participation in the AR’s board meetings nor investment decisions, but it does expect to supervise and monitor your activities and comment where those activities might not meet prevailing standards, infringe its FCA permissions, rules, or both. To this end, Sentinel provides FCA compliance manuals and policies to help ARs comply. Some firms prefer to develop hybrid versions incorporating their local regulatory requirements, which is something Sentinel can help with.

How does Sentinel monitor and supervise its ARs’ activities? Each AR is required to provide Sentinel with a business plan and financial projections, so that we can understand what investment and other activities you are providing and with whom. Your business is risk assessed, and a compliance monitoring programme implemented based on your risk category (low, medium, or high risk). Sentinel will perform quarterly (the frequency may vary driven by your risk rating) compliance monitoring following a programme designed to ensure that all FCA compliance requirements are addressed. We will engage with you and summarise our findings in a written report. Any deficiencies must be addressed promptly.

We will use technology (some ARs may prefer to use their own) to automate routine compliance administration including regular attestations, reporting gifts and entertaining and personal account dealing. Sentinel must pre-approve all marketing materials issued by the Appointed Representative before they are used. Once again technology will facilitate the process.

Finally, the Sentinel team is on hand to advise on any regulatory matters you may face. We aim to foster a close, open, and practical relationship based on the methods outlined above. We will not directly interference in your business unless it is necessary to ensure you remain fully compliant at all times.

Ian Manson, December 2024

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