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What Is an Introducer Appointed Representative (IAR)?

An Introducer Appointed Representative (IAR) is a company or person that is not authorised by the Financial Conduct Authority (FCA) but can conduct activities that are regulated by the FCA because of an Agreement the IAR has with an FCA authorised firm (known as the Principal).

Through that agreement between the IAR and the Principal, the Principal accepts responsibility for ensuring that the IAR complies with the requirements set out by the FCA. This creates an exception for the IAR that allows them to engage in activity that is regulated by the FCA without being directly authorised by the FCA to engage in that activity.

By law, an IAR is restricted to:
(1) Effecting introductions to the ‘Principal’, Home Improvement Finance Ltd (HIF); and
(2) Distributing non-real time financial promotions which relate to products or services available from HIF.

This means you can invite or induce customers to engage your regulated services only by communicating non-real time financial promotions (invitations or inducements to engage a credit broking service that were not made during the course of an interactive dialogue like a telephone call or face to face conversation) and then introduce interested customers to HIF.

What Is a Principal Firm?

A ‘Principal’ Firm is a firm that is authorised and regulated by FCA and that appoints another company to act on its behalf as its Appointed Representative or IAR. In the context of our relationship, the Principal firm is us, Home Improvement Finance Ltd, and within our agreement, we accepted responsibility for your actions as our IAR and for ensuring that you meet the FCA’s rules and requirements.

What Happens If a Client Asks Us About Finance?

As an IAR, we recommend that you direct the customer to further information regarding the availability of finance such as by directing a customer to one of our financial promotions or by providing our contact information to the customer to enable them to contact HIF.

The reason for this is that you are not permitted to communicate real-time financial promotions to customers. The concern is that if a customer asks about the availability of finance and you then invite the customer to use your credit broking service, this would be a real-time financial promotion and therefore breach our relationship.

Therefore, by merely directing the customer to promotional material that is in the form of a non-real time financial promotion, you would not breach our relationship. You are also permitted to provide purely factual information to customers if asked about finance, provided that information does not have an element of persuasion or incitement within it. Please see our training on financial promotions for further clarification.

What is a non-real time financial promotion?

For the purposes of our relationship, you might think of a financial promotion as essentially an advertisement relating to the credit broking services you provide as our IAR. There are two types of financial promotions, the first being a real-time financial promotion and the second being a non-real time financial promotion.

A real-time financial promotion is one that is communicated during the course of an interactive dialogue, like a telephone call or face to face conversation whereas a non-real time financial promotion is one that is communicated in another way (not in real-time), such as the content on a website, social media advertising, a leaflet, flyer, email or letter.

It’s important to remember this difference as you are only permitted to communicate non-real time financial promotions, i.e., via letters, emails etc.

What Happens If a Client Asks for Assistance with An Application for Finance?

If a client asks for assistance with a finance application, we strongly recommend that you introduce the customer to us so that we can help them. The reason for this is that when helping a customer, you might communicate a real-time financial promotion and therefore act outside of your scope as an IAR. Similarly, by helping the customer you might be seen as coercing or putting pressure on the customer to apply for finance, which is also unequivocally prohibited.

For that reason, we recommend that you introduce customers to us where they need help. If however, you feel that it is absolutely proper for you to help the customer, for example, because refusing to help the customer would be unfair or lead to a bad customer outcome, you must do so in a very careful way and ensure you do so in an appropriate manner. Remember also that if you are not sure how to answer the question, you must not answer that question with your ‘best guess’ and must instead pass it to HIF so we can ensure the customer is not misled.

Can We Ask a Customer If They Would Like to Take Out Finance?

As an IAR, you are only allowed to effect introductions to HIF and distribute non-real time financial promotions. This means that you cannot ask a customer if they would like to take out finance during an interactive dialogue (such as a telephone or face to face conversation). You may however ask the customer if they would like to take out finance if you do so by way of a non-interactive dialogue, such as via an email or letter (however, please bear in mind that all financial promotions must be compliant with the FCA’s rules which required HIF to confirm that compliance).

Will HIF Check What We Are Doing?

Yes, we will. As your Principal Firm, we must undertake monitoring to ensure that you are not acting outside the scope of the Agreement and therefore in breach of the Financial Conduct Authority’s rules. All IARs are therefore subject to ongoing monitoring and if we identify any concerns, we may ask you to take action to remedy those concerns.

As An IAR, Are We Allowed to Work with Other Principal Firms?

No, we ask that you do not work with any other principal firms during your time as our IAR.

Can We Charge a Client for An Introduction To HIF?

Absolutely not. Under no circumstance can you charge a customer for an introduction to us. Where it is identified that this has occurred, the Agreement will be terminated immediately.

Can HIF Terminate the Agreement With Us (The IAR) At Any Time?

We may terminate the Agreement without notice in certain circumstances. This is dependent on the reason for termination. For further information, you may refer to our IAR Agreement.

What Is the FCA’s Definition of A Complaint?

The FCA defines a complaint as: “any oral or written expression of dissatisfaction, whether justified or not, from, or on behalf of, a person about the provision of, or failure to provide, a financial service, which (a) alleges that the complainant has suffered (or may suffer) financial loss, material distress, or material inconvenience, and (b) relates to an activity of the respondent, or of any other respondent with whom that respondent has some connection in marketing or providing financial services or products, which comes under the jurisdiction of the Financial Ombudsman Service”.

Further information is provided in the training provided in relation to complaints. A key point to remember is that we expect you to notify us of any complaints you receive within 2 business days from the day you receive them.

What Is a Vulnerable Customer?

The FCA defines a vulnerable customer as “someone who, due to their personal circumstances, is especially susceptible to harm, particularly when a firm is not acting with appropriate levels of care”. When dealing with a person that you think may be a vulnerable customer, you should take increased care to ensure that their needs are met and satisfy any data protection requirements. Please see the training on Treating Customers Fairly for further information.

What Should We Do If We Have Questions About Being An IAR?

If you are ever unsure as to the obligations and limitations of being an IAR or have any questions relating to our relationship, please contact us immediately.

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