Principals and appointed representatives

If you’re a principal firm for an appointed representative (AR), find out what your responsibilities are and when to notify us.

On this page

• Your responsibilities
• How to oversee your ARs
• When to notify us
• More information

An AR carries on regulated activity under the responsibility of an authorised firm, known as 'the principal'.

The principal is responsible for making sure the AR is fit and proper and complies with our rules. This page helps principal firms understand our expectations.

There are other pages in this section about:

• how to become an AR
• how to recruit an AR
• moving from being an AR to being authorised
• consumer credit firms and ARs
• our requirements for controlling your network of ARs, where applicable

Your responsibilities

As a principal firm, you must:

• have a written agreement with the AR, setting out what business they can do
• assess an AR before appointing them to ensure they're fit and proper, financially stable and suitable to carry out business for your firm
• notify us when you appoint new ARs at least 30 days before the appointment takes effect
• review information on ARs’ activities, business and senior management regularly
• ensure data on ARs is up to date and notify us of any changes
• take reasonable steps to ensure ARs act within the scope of their appointment
• ensure at all times that your firm has the skills and resources to oversee your AR, including if an AR's business changes or expands
• provide complaints data and revenue information for ARs on an annual basis
• be clear on when and how to terminate an AR relationship
• ensure an AR continues to meet the necessary standards (such as the Consumer Duty). This applies to the regulated activities carried on by the AR for which you’ve accepted responsibility.
• have adequate financial resources taking into account the activities of your ARs (including Introducer Appointed Representatives)
• hold compliant Professional Indemnity Insurance to cover the activities of your current and former ARs (including Introducer Appointed Representatives) where required to do so by our rules

How to oversee your ARs

You need to be responsible for your ARs on an ongoing basis, and apply an appropriate level of oversight and monitoring to them:

• assess senior management at your AR(s) for for fitness and propriety, which includes competence and capability
• if you delegate functions or tasks to an AR, put safeguards in place – this includes identifying conflicts of interest and implementing enhanced monitoring
• regularly assess whether your controls and resources are adequate
  • if they're not, notify us while you take steps to address; you might need to postpone or terminate AR appointments
  • things to look out for include if an AR's business grows significantly, a high staff turnover or number of complaints, or where an AR's target market or scope of appointment changes
  • looking at key performance indicators – discussing these means you can spot trends and take action
  • reviewing the quality of advice given to customers
  • considering training and development needs
  • reviewing their financial position

  You'll also need to do an annual review of your ARs, prepare an annual self-assessment and understand how to terminate an AR when necessary. Please follow our guidance below, and refer to our Handbook for more detail.

  Annual review of your ARs

  You must review each AR at least every 12 months, including the:

  • fitness and propriety of senior management at ARs and their competence
  • AR’s financial position
  • adequacy of your controls and resources to oversee your AR(s)

  Keep a written record of each AR review you do.

  If any significant issues arise, you must escalate these and ensure they're considered by your firm's governing body.

  In some circumstances you should conduct additional reviews, including when an AR:

  • changes its business model
  • changes the regulated activities it conducts
  • is appointed by another principal
  • receives a significant increase in the number of complaints against them

  This is a document you must prepare annually. It should focus on how you're meeting your responsibilities as the principal firm, and identify any material deficiencies or concerns.

  • a single document designed to identify risks and gaps in compliance
  • reviewed and signed off by your governing body, eg Board, at least every 12 months
  • kept for at least 6 years and available to us if requested

  If your firm has retail customers, or you have a material influence over or determine retail customer outcomes (even if you don’t have a direct customer relationship), you'll also need to comply with the Consumer Duty. This sets standards of consumer protection across financial services, and requires firms to put their customers’ needs first.

  When to notify us

  Make sure you're clear about when you need to send us a notification – see our Handbook for detailed guidance.

  Apart from notifying us when you want to recruit an AR, here are the requirements for other common notifications.

  You must tell us about:

  • changes in the types of regulated activities an AR will conduct at least 10 calendar days before the changes take place
  • any other change to AR details within 10 business days of the change taking place

  Report these changes using the ‘appointed representative or tied agent change details’ form on Connect.

  You must notify us at least 60 days in advance by sending us a 'Sup 15, Annex 4' form through Connect.

  We define regulatory hosting services in our policy statement.

  You must do this annually.

  Send us the data through your regular reporting mechanism within 60 business days of your annual reporting date.

  This will be due on the first annual reporting date after 30 November 2023.

  You must tell us about:

  • changes in the types of regulated activities an AR will conduct at least 10 calendar days before the changes take place
  • any other change to AR details within 10 business days of the change taking place

  Report these changes using the ‘appointed representative or tied agent change details’ form on Connect.

  You must notify us at least 60 days in advance by sending us a 'Sup 15, Annex 4' form through Connect.

  We define regulatory hosting services in our policy statement.

  You must do this annually.

  Send us the data through your regular reporting mechanism within 60 business days of your annual reporting date.

  This will be due on the first annual reporting date after 30 November 2023.

  More information

  Introducer ARs (IARs)

  IARs are appointed representatives who can only carry out the following limited activities on behalf of your firm:

  • undertaking introductions
  • distributing financial promotions

  As the principal, you must ensure that your IARs only carry out the activities they're permitted to do. Not all our requirements apply to IARs, eg you can provide less information about IARs when you notify us of their appointment.

  However, you still need to apply appropriate oversight. See our Handbook for where specific rules don't apply to IARs.

  Our approach to principals and ARs

  We're committed to improving the AR regime. Our Business Plan and Strategy 2022 to 2025 explain our programme of work including:

  • new rules to ensure principal firms oversee ARs effectively
  • greater engagement with, and scrutiny of, firms as they appoint ARs, both for new applicants and firms already authorised
  • targeted supervision of principal firms across the whole financial services sector, by a new AR department, using improved data and analytical tools
  • a new fee that principals must pay for each of their ARs to help fund our work in this area