Can an appointed representative become directly authorised later?

Yes. This is a well-established pathway. Many firms start as an AR to enter the market quickly, then apply for direct authorisation once they have an established business model, a track record, and the resources for independent compliance. The move needs a full FCA authorisation application, and separately, careful planning around the handover of regulatory responsibilities, client notifications, and a clean contractual exit from the principal arrangement. The FCA assesses the application on its own merits, though demonstrable experience as an AR can support the application narrative.

How long does the transition from AR to direct authorisation take?

Typically 9 to 18 months from the point preparation begins to the point the FCA grants authorisation and the firm can operate independently. The FCA's own application assessment usually runs 6 to 12 months; the rest of the time goes on building the compliance function, governance, financial resources, regulatory reporting and Senior Manager approvals a directly authorised firm needs. Throughout preparation, the firm keeps operating as an AR under its principal, and should not start operating as if directly authorised before the FCA has actually granted authorisation.

Why would an AR want to leave a principal that has done nothing wrong?

Principal dependency is a risk in its own right, separate from how well any particular principal performs. If a principal's own authorisation is cancelled, varied or surrendered, its ARs lose the ability to conduct regulated activities immediately and cannot serve clients in a regulated capacity until they find a new principal or obtain their own authorisation. In its July 2022 Dear CEO letter to principal firms, the FCA said it had found significant levels of harm arising from AR activity and widespread gaps in principal oversight, and supervisory attention on the AR model has increased since. That scrutiny falls on the principal in the first instance, but it is the AR's business that stops trading if the principal relationship fails.

Does time spent as an AR count for anything in a direct application?

It can help the narrative, though it does not soften the assessment itself. Firms transitioning from AR to direct authorisation should evidence their track record: compliance monitoring results, complaint volumes and outcomes, and how any regulatory issues that arose during the AR period were handled. A clean AR track record strengthens the application; a history of compliance failings, complaints or principal interventions attracts additional FCA scrutiny.

Leaving An AR Network · Going Direct

Appointed Representative to Direct FCA Authorisation

If you are currently an Appointed Representative and want to leave your principal or network and become directly authorised, the decision reaches further than a single application. It means scoping your own permissions, building the compliance function your principal has been providing, and planning a handover that protects your clients and your regulatory standing while you make the switch. MEMA supports firms through that process end to end.

Discuss Your Position Call: 0330 133 0811

The Position

What the AR-to-direct transition actually involves

Section 39, FSMA 2000

The AR Exemption

An appointed representative carries on regulated activities under the regulatory umbrella of an FCA-authorised principal firm, which takes on regulatory responsibility for the AR's activities under section 39 of the Financial Services and Markets Act 2000.

6 to 12 Months

FCA Application Assessment

The FCA's own assessment of a direct authorisation application typically runs 6 to 12 months once submitted. Firms need separate preparation time before they are ready to submit a credible application.

9 to 18 Months

Typical Full Transition

From the point preparation begins to the point the FCA grants authorisation and the firm can operate independently, the typical transition runs 9 to 18 months. The firm continues trading as an AR under its principal throughout.

July 2022

FCA Dear CEO Letter to Principals

The FCA told principal firms it had found significant levels of harm arising from AR activity and that many principals were failing to adequately oversee their ARs. Supervisory attention on the AR model, and the firms operating under it, has increased since.

Why Firms Make This Move

Direct authorisation trades a lower-cost, faster start for control. For an AR that has outgrown the arrangement, the trade tends to run the other way.

Regulatory control

As an AR, the principal controls the compliance framework, permissions and oversight. Direct authorisation means the firm sets its own compliance arrangements and risk appetite.

Product flexibility

An AR is restricted to activities within its principal's permission scope and appetite. A directly authorised firm has full flexibility within its own permission set.

Brand independence

Some principals require co-branding or impose brand guidelines. Direct authorisation gives the firm complete control over its brand and market positioning.

Exit and dependency

As an AR, contractual notice periods apply and the client book may be subject to the principal's terms. A directly authorised firm has no dependency on a third party for its regulatory status.

The commercial argument usually comes down to the ongoing cost of the principal relationship. An AR paying in the region of 15-25% of revenue to a principal, or a comparable revenue share or oversight fee, is making a significant ongoing transfer. For a firm generating meaningful revenue, that cost can overtake the one-off cost of obtaining and maintaining direct authorisation within roughly twelve to twenty-four months.

The FCA's own charges are the smaller part of that comparison. A direct authorisation application is priced by category rather than by a single fee: most financial advisers, mortgage brokers and general insurance intermediaries fall into Category 4, currently £2,820, and most other firms sit between £560 and £5,640. Once authorised, firms in the 'A' fee-blocks pay a minimum annual periodic fee of £2,200, with more due where the firm's reported income takes it above the minimum. It is the recurring principal share, not the regulator's fee, that usually decides the arithmetic.

Source: FCA, Pricing categories for application fees and FCA fee rate movement 2026/27. Application fee categories and the 2026/27 minimum periodic fee, as at August 2026. The FCA revises both annually.

What We Do

From the decision to go direct through to a completed, independent authorisation

Application & Evidence Build

Perimeter and permissions scoping against the RAO and PERG
Regulatory business plan, financial projections and Threshold Conditions evidence
SMF appointments, Statements of Responsibilities and fitness & propriety assessments
A compliance monitoring programme built for independent operation, not inherited from the principal

Principal Exit & Handover

AR agreement review, including notice periods and client book provisions
Planning the handover of regulatory responsibilities and client notifications
Sequencing the exit against your authorisation timeline
Continuity of service through to a clean regulatory handover

End-to-End Application Management

FCA case management and liaison through to approval
Senior Manager interview preparation
Building the independent compliance function and reporting capability a directly authorised firm needs from day one
Governance frameworks sized to the firm you are now, not the AR you were

Mistakes We Help Firms Avoid

Patterns we see repeatedly in firms making this transition

Treating the AR route as a permanent arrangement rather than a staging post, until the cumulative principal fees outweigh the one-off cost of independent authorisation

Underestimating the dependency risk in the AR agreement: principals can typically terminate on 30 to 90 days' notice, for any reason or no reason

Assuming AR status means a lighter regulatory burden. SM&CR has applied to ARs since December 2019, and conduct, financial promotion and compliance obligations still apply in full

Leaving the transition planning too late. Building an independent compliance function, reporting capability and governance structure from a standing start takes time, and twelve to eighteen months of lead time is a realistic minimum

Frequently Asked Questions

Select a question to view the answer.

Related Services

If you oversee Appointed Representatives rather than operating as one, see our page for principal firms.

FCA Authorisation Variation of Permissions Appointed Representative & Principal Firms (for principals)

Related FCA Guidance

Deeper reading on the AR regime and the route to direct authorisation.

Comparison

AR vs Direct Authorisation

Speed, cost, control, flexibility and exit complexity, compared side by side.

Decision

AR vs Direct Authorisation: Making the Right Choice

Cost trade-offs, control, exit planning, and when each route is the right one.

Guide

Appointed Representative Guide

The AR legal framework, AR types, and principal obligations under FSMA s39.

Speak to a specialist

Talk to us about leaving your principal

Whether you have already decided to go direct or are still weighing it up against staying an AR, tell us where you stand and we will come back to you.

0330 133 0811

Prefer to talk it through first? Call and you will speak to a consultant, not a switchboard.

Planning To Leave Your Principal?

Twelve to eighteen months of lead time is a realistic minimum for a properly built application and a clean exit. The earlier you start planning, the more control you keep over both.

Phone: 0330 133 0811

Email: contact@memaconsultants.com