On 11 August 2025, the UK government published a policy statement setting out an approach intended to improve confidence in the use of Appointed Representatives (AR) and to safeguard the future of the UK's AR regime. The policy statement included an initial explanation of proposals intended to achieve this. 

The government has now launched a consultation which sets out more detail on the proposed changes.

It views the AR regime as playing an important part in providing financial services, delivering a range of benefits to businesses and consumers. The regime provides a proportionate and cost-effective way for firms to engage in regulated activity without being authorised, allowing a broader range of providers to enter the marketplace. In doing so, it says that the AR regime promotes competition, supports innovation and contributes to economic growth.

The government wants to make sure that the AR regime operates safely so that it can deliver these benefits to firms, consumers and the UK economy. Therefore, the government plans to adapt the legislative framework for ARs to provide what it says will be a proportionate level of protection for consumers of AR firms, while aiming to make sure that the current broad scope of the AR regime is preserved, enabling the financial services sector, and the UK economy as a whole, to benefit from the regime in future.

It proposes the following key reforms.

1.  Specific regulatory permission to act as a principal.

• Permission. To help prevent misconduct involving ARs, authorised firms wishing to use ARs will need to first obtain permission from the Financial Conduct Authority (FCA) – this will enable the FCA to ensure authorised firms have appropriate expertise and resources to effectively oversee their ARs and ensure they act responsibly.
• Scope of permission.  This may be either to act a principal to 'full ARs' or to act as principal to 'introducer ARs' (IAR).  Firms deemed to have IAR principal permission would in future need to apply to vary it if they later wish to act as principal to full ARs.
• AR contract.  The detailed requirements relating to the contractual relationship between principals and their ARs, as well as the inclusion of ARs on the Financial Services Register, will be removed from legislation and set out in FCA rules – with the aim of making the regime more coherent, user-friendly and flexible.
• Reliance on exemption.  Where an AR has satisfied all the requirements applicable to it to rely on the exemption to the general prohibition, it will not breach the general prohibition simply because its principal has not obtained the relevant regulatory permission.  Rather, that will be treated as a breach of an FCA requirement by the principal firm.
• Incumbent principals.  Existing principal firms will not need to apply for the new permission, they will be deemed to have it.  The permission could be varied or withdrawn later if necessary to protect consumers from harm.
• New firm authorisation.  The principal permission may be applied for as part of a new firm authorisation process – no separate application would be required.
• Implementation timetable.  This will be set out once relevant legislation has been made.
• Repeal of tied agent regime.  This no longer serves a purpose post-Brexit, and will be repealed.

2.  Extension of FOS jurisdiction to ARs

• To provide appropriate consumer protection when things go wrong, consumers will be able to make a complaint to the Financial Ombudsman Service (FOS) if they are unable to resolve a dispute involving an AR where an authorised firm is not responsible for the issue in dispute.  Typically, a principal will be responsible for the acts or omissions of its AR which are relevant to a complaint.  In the relatively small percentage of FOS cases in which the principal firm is not responsible for the activity of its AR, the proposal is that such cases will fall within the compulsory jurisdiction of the FOS – concerning acts or omissions of an AR occurring after an implementation date is set once relevant legislation has been made.  In these circumstances, any appropriate redress measures may be directed to the AR.  The principal firm will remain responsible for complaint handling arrangements.  The FOS will be given the power to make scheme rules to involve an AR in the investigation of a complaint where a complaint relates to the acts of omissions of the AR.

3.  Bringing ARs within scope of the Senior Managers and Certification Regime

• SMCR to replace APR.  While the SMCR applies to all authorised firms, including principal firms, the earlier Approved Persons Regime (APR) still applies to ARs. The government believes this inconsistent approach for principals and ARs serves no useful purpose, sets different standards for similar or identical activities depending on the status of the firm performing them, and results in unnecessary administrative burdens for both firms and the FCA.
• How SMCR might apply.  The elements would include:
  • conduct rules applying to all individuals in an AR (except ancillary staff)
  • certification-type regime (fit and proper requirements) to be applied under FCA rules to principal firms in relation to their ARs.  This should result in a considerable reduction of the around 38,000 people within ARs that currently need FCA approval under the APR.
  • The FCA would have the ability to create a new dedicated AR Senior Management Function (SMF) in principal firms. This would reflect the responsibility that principal firms take on when appointing ARs, with senior management functions within principal firms held to account for overseeing the principal's ARs.

Observations

This appears to be a helpful suite of reforms that should enable the FCA to ensure authorised firms have appropriate expertise and resources to effectively oversee their ARs and make sure that they act responsibly, without being overly disruptive to incumbents and, overall, making the regime more coherent, user-friendly and efficient.

The consultation is rather light in detail on how the SMCR will apply to ARs, in particular the certification-type aspect. However, this is unsurprising given the broader review of SMCR that is currently underway – hopefully the final regime will be both consistent and proportionate.

The consultation ends on 9 April 2026.