An appointed representative (AR) is an agent of a firm that is regulated directly by the Financial Conduct Authority.This agent isn’t directly authorised to sell financial products but has a written contract in place to sell products on behalf of the principal firm. As such, it is up to the principal firm to make sure that its appointed representatives maintain a satisfactory level of competence. Failure to do this can result in a claim against both these parties.
The FCA’s report on the General Insurance Sector uncovered widespread and systemic failures of principal firms to properly supervise their ARs. As a consequence, this has led to customer detriment in terms of both mis-selling and service provision, with only a minority of those companies surveyed able to show good practice. This report is likely to cause huge damage to the General Insurance Industry and could result in compensation being recovered by millions of customers.
There are numerous examples of abuses, including:
- Staff forging customer signatures to push extra insurance products
- Unsuitably low levels of supervision by the principal over its agents
- Agents knowingly mis-selling travel insurance to customers with health conditions that would never be capable of making a successful claim
- Pressuring customers to purchase products they did not need
- Failure to monitor customer complaints appropriately