Section 250 doesn't stop at your firm's own employees. If you rely on significant third parties — sub-advisers, outsourced service providers, key introducers — their Section 250 compliance is part of your risk picture. Here's what you need to request and retain.
Why counterparty compliance matters under Section 250
Section 250 creates obligations for FCA-authorised firms in relation to individuals with significant roles in their financial activities. That scope can extend to third parties who perform significant functions on behalf of your firm — sub-advisers who manage client assets, outsourced compliance functions, or introducers with material influence over client relationships.
Your own gap analysis covers your internal population. But if a key third party has uncovered individuals with significant authority over your regulated activities, that exposure sits within your risk perimeter even if it sits outside your payroll. Best-practice compliance — and the most defensible evidence pack — includes written confirmation from significant counterparties that they have completed their own Section 250 analysis.
Who counts as a significant counterparty?
Not every supplier or service provider is a significant counterparty for Section 250 purposes. The test is whether the third party has material influence over your FCA-regulated activities. This typically includes: sub-advisers or delegated portfolio managers, outsourced compliance or risk functions, key introducers or distribution partners with significant client-facing authority, and technology providers who have direct access to client data or trading systems with operational authority.
A cleaning contractor or marketing agency does not meet this threshold. A sub-adviser managing £200m of your clients' assets almost certainly does.
What to request
A Section 250 counterparty compliance request should ask the third party to confirm in writing that: (1) they have completed a Section 250 gap analysis covering all individuals with significant roles in their activities that relate to your firm, (2) they have sent declarations to all individuals identified in the gap, and (3) they have generated a board evidence pack documenting the analysis and declaration cycle.
You do not need to see their evidence pack — only written confirmation that it exists and has been completed. Retain this confirmation as part of your own evidence pack.
Handling non-responses and refusals
If a significant counterparty does not respond to your compliance request within a reasonable timeframe (10 business days is appropriate), document the chase. If they actively refuse to confirm their compliance status, escalate to your board and legal team. A counterparty that cannot confirm Section 250 compliance may represent a relationship risk that needs to be assessed before June 29.
CoverProof's counterparty compliance request feature manages this cycle: sending requests, tracking responses, and recording all chase attempts as part of your evidence audit trail.
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