Appointed Representative & Principal Firms
Whether you are onboarding ARs or operating under a principal firm, we help you meet FCA expectations on oversight, compliance monitoring, and accountability.
What is an appointed representative?
An appointed representative (AR) is a firm or individual that carries on regulated activity under the responsibility of an FCA-authorised firm, known as its principal. The AR does not need its own FCA authorisation for that activity, because section 39 of the Financial Services and Markets Act 2000 (FSMA) makes it an exempt person. The conditions are that the AR has a contract with an authorised principal that permits or requires it to carry on a prescribed type of business, and that the principal has accepted responsibility in writing for the AR's activities in carrying on that business.
The consequence for the principal is serious. Under section 39(3), the principal is responsible for what the AR does or omits in that business to the same extent as if the principal had expressly permitted it. That is why the FCA expects a principal to oversee its ARs to the same standard as its own employees, and why the AR regime attracts so much supervisory attention.
Any person other than an authorised person can be an AR, including a company, a partnership or a sole trader. The exception is an authorised person with only a limited permission, which can also act as an AR (SUP 12.2.3G). An AR can have more than one principal, but the rules restrict this in some areas, for example for retail designated investment business and mortgage credit intermediation (SUP 12.5.6AR).
Introducer appointed representatives
An introducer appointed representative (IAR) has a narrower role. Its appointment must be limited to effecting introductions to the principal or its group, and distributing non-real-time financial promotions for the principal's products or services (SUP 12.5.7R). An IAR cannot, for example, advise on investments, arrange deals or deal as agent. Most SUP 12 requirements still apply to IARs, but some are replaced or relaxed, and the approved persons regime does not apply to them (SUP 12.2.8G to 12.2.10G).
Principal firm responsibilities and what the FCA expects
A principal is responsible for making sure each AR is fit and proper and complies with FCA rules. The detailed requirements sit in SUP 12 of the FCA Handbook. They were strengthened by Policy Statement PS22/11, "Improvements to the Appointed Representatives regime", with the changes taking effect on 8 December 2022. PS22/11 added more information and notification requirements for principals, and clarified and strengthened their responsibilities, including pre-appointment notification, an annual review of each AR, and an annual self-assessment approved by the governing body. Transitional arrangements gave firms extra time for ongoing reporting and for the first annual review and self-assessment.
| Stage | What the principal must do | Handbook reference |
|---|---|---|
| Before appointment | Establish on reasonable grounds that the appointment does not stop you meeting the threshold conditions, that the person is solvent and otherwise suitable, has no close links that hinder supervision, that you have adequate controls and resources to oversee them, and that their activities do not create undue risk of harm to consumers or market integrity. | SUP 12.4.2R |
| Contract | Have a written contract that meets the Appointed Representatives Regulations, requires the AR to comply with the Act and FCA rules, and lets you terminate if you can no longer adequately oversee the AR. | SUP 12.5.5R |
| Notify the FCA | Submit the appointment notification so it is received by the FCA no later than 30 days before the AR begins regulated activities. Changes to details, and to the regulated activities an AR may carry on, also have to be notified within the set time limits. | SUP 12.7.1R, SUP 12.7.7R |
| Ongoing oversight | Keep monitoring the AR and its compliance with the contract, take action if the appointment conditions are no longer met, and tell the FCA as soon as you have reasonable grounds to believe they are not, or are likely not to be, satisfied. | SUP 12.6, SUP 12.7.8R |
| Annual review | At least every 12 months, review each AR (other than an introducer AR) on its solvency and suitability, the fitness and propriety of its controllers, directors, partners and managers, and the adequacy of your controls and resources. Extra reviews are triggered by events such as a change of business model or a significant rise in complaints. Keep a written record for at least six years. | SUP 12.6A.2R to 12.6A.4R |
| Annual self-assessment | Your governing body must review and approve a written self-assessment at least every 12 months. It records how you comply with SUP 12, identifies material deficiencies, includes concerns from the AR reviews and agrees the steps to fix them. Keep each approved document for at least six years. | SUP 12.6A.6R, 12.6A.8R |
| Termination | If you or the AR propose to end the contract, notify the FCA within ten business days of the decision. If you are the one terminating, tell the AR in writing (before termination, or immediately if that is not possible) that it will no longer be an exempt person. You must also make sure outstanding customer obligations are completed, and wind down in an orderly way. | SUP 12.8.1R, 12.8.3R |
Principals also report complaints and revenue data for their ARs each year, within 60 business days of their accounting reference date (SUP 12.7.9DR). Where an AR serves retail customers or influences retail outcomes, the Consumer Duty applies, and the FCA's guidance for principals also covers oversight of financial crime controls at ARs. The detail changes, so always check the current text on the FCA's appointed representatives page and in SUP 12.
For a plain-English walk through, read our guide to the appointed representative regime, or use our introducer appointed representative assessment to see whether that route may fit a business model.
How to become an appointed representative
To become an AR you need an FCA-authorised principal willing to take responsibility for your regulated activities. Expect the principal to test you before it appoints you, because the rules require it to establish that you are suitable, solvent and properly controlled, and that your activities do not create undue risk of harm to consumers.
What a principal checks
- Your financial position, including whether you are solvent.
- The fitness and propriety of your directors, controllers and managers, and their competence for the activities you will carry on.
- Any close links that could make effective supervision difficult.
- Whether its own controls and resources are adequate to monitor and enforce your compliance.
- Extra checks for particular activities, such as good repute for insurance distribution and criminal record, bankruptcy and competence checks for mortgage credit intermediation.
The appointed representative agreement
The agreement must be in writing and meet the Appointed Representatives Regulations. Under SUP 12.5.5R it must require you to comply with the Act and FCA rules for your regulated activities, including through your staff and contractors, require you to tell the principal about other appointments if multiple principals are allowed, and allow the principal to terminate if it can no longer adequately oversee you. The FCA also expects the contract to require you to cooperate with the FCA, give access to premises and provide the information the principal needs to meet its own duties (SUP 12.5.3G).
You cannot start regulated activity until the principal has notified the FCA, and the notification must be received by the FCA no later than 30 days before you begin regulated activities. After appointment, plan for at least annual reviews, information requests and file reviews, and keep your own records ready for them.
Appointed representative or directly authorised?
An AR is not authorised in its own right: it relies on the principal's permissions and sits inside the principal's controls. A directly authorised firm holds its own FCA permission, answers to the FCA for its own conduct and must meet the threshold conditions itself. The route is a commercial and regulatory choice: ARs give up some independence in exchange for working under an established regulatory structure, and the principal may set the rules on the activities, products and counterparties you can use.
Firms often start as ARs and later apply for their own authorisation as they grow. If that is on your roadmap, see our guidance on moving from appointed representative to direct authorisation. If you are earlier in the journey, our FCA authorisation service explains the direct route. Our guide to appointed representative vs direct authorisation compares the two routes in full.
Insurance and mortgage appointed representatives
Some activities carry additional AR rules. For insurance distribution, the principal must make sure the AR meets the good repute requirements in SYSC 28.3 before appointment and obtain information on shareholders with more than 10% and on close links if the AR is not already on the Financial Services Register (SUP 12.4.8A to 12.4.8C). The AR must not start insurance distribution activity until it is included on the Register for those activities (SUP 12.4.9G). The multiple principal restriction does not apply to non-investment insurance contracts (SUP 12.5.6CG).
For ARs carrying on mortgage credit intermediation, the principal must check before appointment, and on a continuing basis, for relevant criminal convictions and bankruptcy and for the knowledge and competence required. It must also make sure professional indemnity insurance is in place under the mortgage credit intermediary rules (SUP 12.4.10A and 12.4.10B). A mortgage credit intermediation AR is generally limited to one principal (SUP 12.5.6AR).
Authorised representative: the term and the payments equivalent
The term used in FSMA and the FCA Handbook for this status is "appointed representative". "Authorised representative" is not the FCA's term for it. People searching for an authorised representative are usually looking either for the AR regime above or for an authorised firm, which is a separate thing.
In payments and e-money the model is different. Under the Payment Services Regulations 2017, an authorised or small payment institution, or registered account information service provider, may not provide payment services through an agent unless the agent is included on the FCA register (regulation 34). It is responsible for its agents, to the same extent as if it had expressly permitted their acts and omissions (regulation 36). The Electronic Money Regulations 2011 apply a similar registration rule to agents of e-money institutions (regulation 34). The FCA's approach document also deals with distributors of e-money. We have not set out the distributor rules here, so check that chapter of the approach document if you plan to use distributors.
How MEMA helps principals and appointed representatives
MEMA Consultants is led by ex-FCA regulators and has supported 100+ firms through FCA authorisation, across 11 sectors and 10+ years' experience. For the AR regime that means practical help on both sides of the relationship.
For principal firms
- AR onboarding and due diligence workflows that follow SUP 12.4. Our guide on how to check a UK company covers the Companies House part of that check.
- Oversight policies, procedures and management information.
- Annual AR reviews and the governing body self-assessment.
- File reviews and thematic monitoring through our compliance monitoring programme.
For appointed representatives
- Compliance gap analysis and action plans against your principal's expectations.
- Policy and document support, and conduct and training guidance.
- Planning a move to direct authorisation when you are ready.
Our wider FCA compliance consultancy covers ongoing support, and you can book a free scoping call to talk through your position.
Appointed representative FAQs
What is an appointed representative?
An appointed representative (AR) is a firm or individual that carries on regulated activity under the responsibility of an FCA-authorised firm, its principal. Under section 39 of FSMA the AR is an exempt person, so it does not need its own authorisation for that activity, because the principal has accepted responsibility for it in writing.
What is a principal firm?
A principal firm is an FCA-authorised firm that has appointed an appointed representative and accepted responsibility in writing for the regulated activity the AR carries on, under section 39 of FSMA. The AR is not itself authorised. The principal is responsible for the AR's acts in that business as if it had expressly permitted them (FSMA s39(3)), which is why SUP 12 requires it to assess, contract with, notify the FCA about and oversee each AR.
What are a principal firm's responsibilities for its appointed representatives?
The principal must assess the AR before appointment, have a written contract, make sure the FCA receives the appointment notification no later than 30 days before the AR begins regulated activities, oversee the AR on an ongoing basis, review each AR at least every 12 months, have its governing body approve a self-assessment at least every 12 months, and follow the termination steps if the relationship ends. The detail is in SUP 12 of the FCA Handbook.
How do I become an appointed representative?
You need an FCA-authorised principal that is willing to appoint you. It must establish that you are suitable and solvent, that it can oversee you, and that you do not create undue risk of harm. You then sign a written agreement, and the principal notifies the FCA before you start regulated activity.
Is an appointed representative the same as being directly authorised?
No. An AR carries on regulated activity under its principal's authorisation and responsibility, and is not itself authorised. A directly authorised firm holds its own FCA permission and answers to the FCA for its own conduct. Many firms start as ARs and apply for direct authorisation later.
Is an authorised representative the same as an appointed representative?
"Appointed representative" is the term used in FSMA and the FCA Handbook. "Authorised representative" is not the FCA's term for this status. In payments and e-money, firms use agents registered under the Payment Services Regulations 2017 and the Electronic Money Regulations 2011 instead.
Are there extra rules for insurance appointed representatives?
Yes. For insurance distribution the principal must make sure the AR meets the good repute requirements in SYSC 28.3, and the AR must not start insurance distribution until it is included on the Financial Services Register for those activities (SUP 12.4.8A and 12.4.9G).
What changed in the appointed representative regime in December 2022?
Policy Statement PS22/11 introduced stronger rules from 8 December 2022, including notification before an AR is appointed, an annual review of each AR, a governing body self-assessment and more information reporting. Transitional arrangements gave firms extra time for some of these.
This page is general information, not advice on your own circumstances. Sources: FSMA 2000 section 39, FCA Handbook SUP 12, FCA PS22/11, the FCA's appointed representatives guidance, and the Payment Services Regulations 2017.
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