Considering upgrading to a Category 4 licence?
A Representative Office (Rep Office) undertaking activities outside of the scope of its licence might be in breach of Article 42(4) of the Regulatory Law and the DFSA could take appropriate regulatory action if it considers a breach has occurred including withdrawing authorisation or taking formal enforcement action.
Rep Office licence holders are permitted to market one or more financial services or financial products which are offered in a jurisdiction other than the DIFC by a related party i.e. its head office, another branch of the head office or a Group member.
(a) Providing information on one or more financial products or financial services
(b) Engaging in promotion in relation to (a) or
(c) Making introduction or referrals in connection with the offer of financial services or financial products
Financial products: an Investment, a Credit Facility, a Deposit, a Profit Sharing Investment Account or a Contract of Insurance.
Financial services: A broad list of activities specified in GEN module rule 2.2.2.
REPRESENTATIVE OFFICE LICENCE HOLDER
* No arranging
Rep Offices are not permitted to conduct arranging activities and can only refer or introduce potential customers to a related party, who provides the financial products or services.
* No advising
Prohibited from ‘Advising on Financial Products’ e.g. giving a view on the merits of an investor buying or selling a financial products. It can only give factual information about services offered by a related third party.
* No Clients
No client relationship or relationship management activities are permitted e.g. you cannot nominate a Rep Office employee as a key contact for a potential customer to make enquiries or complaints.
* Limited marketing
A Rep Office is limited to providing factual information and promotional literature about financial products or financial services, e.g. product features and benefits, offered by a related party outside of the DIFC. Limited to Professional Clients and Market Counterparties only.
CATEGORY 4 LICENCE HOLDER
Licensed to conduct ‘Arranging Deals in Investments, Arranging Credit and Advising on Credit, Arranging Custody and Insurance Intermediation’.
Licensed to conduct ‘Advising on Financial Products’ and in the case of insurance products, ‘Insurance Intermediation’ allowing the entity to give opinions, recommendations or specific advice on buying and selling.
Licensed to maintain and manage client relationships, assist with the completion of account opening documentation, subscriptions forms, and acceptance and forwarding of client instructions.
Licensed to provide more in depth information, e.g. recommendations to buy/sell with virtually no restrictions. The distribution of marketing material can be tailored to the client.
May apply for a Retail Endorsement on its License.
How HOLT consultancy can help you
Evaluate your existing scope of activities and check if you are operating within the boundaries of permitted activities.
Assist with varying or upgrading a licence including detailing the rationale for the licence variation and updating the Regulatory Business Plan.
Provide Compliance and AML manuals tailored to your business model.
Develop a Risk Based Compliance Monitoring Program.
Assist in completing applications for new Authorised Individuals.
Train employees for interviews with the regulator.
Document and help you to implement systems and controls to meet the regulator’s requirements according to your risk appetite.