"Our work in this area is continuing and we will take action where we identify non-compliance with our requirements. We expect you to consider the content of this alert and take appropriate action."
The warning follows an alert issued in August 2016 and highlights the risks to firms of not having adequate oversight of its ARs.
The FCA says customers risk suffering financial harm as a result because some of the underlying investments may be controlled by or closely linked to introducers or ARs. It says some are badly run while others are "outright scams".
The regulator says it has seen instances where the referral from the introducer is made with a clear investment desire expressed by the customer and documentation already completed.
It also found that some networks are not always monitoring the type, volume and source of business being submitted by its ARs.
In its guidance, the FCA says a Principal firm should consider why it is appointing an AR and whether this is necessary for the activities they will be carrying out. The FCA says Introducer Appointed Representatives are being appointed when their only business is to generate investment introductions.
It added that if an AR has not submitted any business or generated introductions for some time firms should consider why they should remain registered.
The alert also recommends checking Companies House’s website when considering AR and introducer relationships.
Additionally, it says firms must ensure that no-one at their ARs is appointed for a role without prior FCA approval where required. For example, in designated investment business all directors of ARs need prior approval from the FCA.
The FCA says: "Our work in this area is continuing and we will take action where we identify non-compliance with our requirements. We expect you to consider the content of this alert and take appropriate action."