Glossary
Regulatory hosting
A regulatory host is a principal whose business includes offering, for profit, a service through which firms become its ARs, where it carries on no regulated business of its own other than through its ARs, or its ARs' business is unconnected to its own. A firm must tell the FCA at least 60 days before it starts offering such a service.
The rules
- The Glossary definition was added by PS22/11. It turns on whether the service is offered for remuneration with a view to profit, and whether the ARs' activities are connected to the principal's own regulated activity.
- Notice must reach the FCA at least 60 days before the firm begins offering hosting services, in addition to the 30-day notice for each AR (SUP 12.7.9AR, SUP 12.7.9BG).
- REP025 captures regulatory hosting fees within the remuneration paid to the principal.
What the FCA is concerned about
- Too little resource, a lack of expertise in the different markets its ARs operate in, and weak systems and controls.
- It expects regular meetings with ARs, review of their MI and file audits.
Common misconceptions
- “Every AR network is a regulatory host.”
- The definition turns on whether the ARs' activities are connected to the principal's own regulated business. A network whose ARs sell the principal's own type of business is not necessarily a host.
- “Hosting is discouraged or prohibited.”
- It is allowed. The FCA acknowledges its benefits, including quick and cost-effective access to the market, alongside the risks.
In Merrin
For a host with ARs in different markets, Merrin keeps each firm's scope, returns and review on its own record, with questions set per firm.
Risk & completenessSources
Checked against these sources on . This is general information, not legal advice.
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