How to Become an Appointed Representative in the UK

What an appointed representative is

An appointed representative is a firm or individual that carries on regulated activity under the responsibility of an authorised firm, which the FCA calls the principal. The appointed representative does not hold its own FCA authorisation. Instead it relies on the principal, who accepts responsibility in writing for the regulated business the representative carries on.

The legal basis sits in section 39 of the Financial Services and Markets Act 2000. Section 39 makes an appointed representative an exempt person, so it is not caught by the general prohibition against carrying on regulated activities without authorisation. The exemption only applies where the representative is party to a contract with an authorised person that permits or requires it to carry on business of a prescribed description, and where the principal has accepted responsibility in writing for that business.

Because the exemption depends entirely on the relationship with the principal, an appointed representative can only do the regulated activities its principal is itself authorised to carry on and has agreed to accept responsibility for. If the principal has not accepted responsibility for a particular activity, the appointed representative cannot lawfully carry it on. For certain activities, the appointed representative must also be entered on the Financial Services Register as a condition of the exemption applying.

The consequence of this structure is that the principal is on the hook for your conduct. Under section 39, the principal is responsible, to the same extent as if it had expressly permitted it, for anything done or omitted by the appointed representative in carrying on the business for which the principal has accepted responsibility. That responsibility is precisely why a principal will look closely at who it appoints, and why the FCA has focused on how principals oversee their appointed representatives rather than on the representatives themselves.

Why firms choose the appointed representative route

The main attraction of becoming an appointed representative is speed and simplicity of entry. You do not have to prepare and submit your own authorisation application, and you can begin carrying on regulated activities once the principal relationship is in place and the notification period has passed. For a new business, a start-up testing a model, or a firm that only needs a narrow set of activities, this can be a proportionate way to reach the market.

There are trade-offs. You operate within the principal's permissions, so you cannot simply expand into new regulated activities without the principal agreeing and being authorised for them. You pay the principal for oversight, and you accept a level of supervision that a directly authorised firm would manage itself. You are also dependent on the principal's own standing: if the principal loses its authorisation or fails, your ability to carry on regulated business is affected. Weighing these factors realistically is part of deciding whether the route suits you.

Appointed representative or directly authorised

The first decision is whether to become an appointed representative at all, or to apply for your own authorisation and become directly authorised. Both let you carry on regulated activities lawfully, but the trade-offs are different. As an appointed representative you avoid a direct authorisation application and rely on the principal's permissions, but you give up independence and pay the principal for oversight. As a directly authorised firm you hold your own permission and answer to the FCA yourself.

The table below sets out the practical differences. Neither route is inherently better; the right choice depends on the activities you want to carry on, the resources you have, and how much independence you need.

Introducer appointed representative or full appointed representative

There are two kinds of appointed representative, and the difference matters for what you can do. An introducer appointed representative, or IAR, can only carry on a limited set of activities on behalf of its principal: making introductions and distributing the principal's financial promotions. It cannot advise, arrange or otherwise deal with clients on the regulated activity itself.

A full appointed representative can carry on a wider range of regulated activities, within the scope the principal is authorised for and has accepted responsibility for in the written agreement. Full appointed representatives therefore attract more oversight from the principal than introducer appointed representatives, because the principal is responsible for a broader range of conduct.

The FCA estimated that there were around 3,400 principals with around 37,000 appointed representatives, including introducer appointed representatives, at the time it reviewed the regime. Deciding which type you need is an early step, because it shapes the written agreement, the due diligence a principal will run, and the ongoing supervision you should expect.

How to become an appointed representative, step by step

Becoming an appointed representative is less about a formal FCA application and more about finding the right principal and passing its due diligence. The principal handles the notification to the FCA, but you will need to demonstrate that you are fit and proper, financially stable and suitable to carry on the business.

The steps below outline the typical path. Timing is driven largely by the principal, and in particular by the pre-notification period the FCA now requires before an appointment can take effect.

What a principal must now do under PS22/11

The FCA published PS22/11, Improvements to the Appointed Representatives regime, in August 2022, with the new rules coming into force on 8 December 2022. The changes fall into two broad areas: collecting additional information on appointed representatives and strengthening reporting requirements for principals, and clarifying and strengthening the responsibilities of principals themselves.

Before an appointment, a principal must assess a prospective appointed representative to ensure it is fit and proper, financially stable and suitable, and must have a written agreement setting out what business the representative can do. The principal must then notify the FCA at least 30 calendar days before the appointment takes effect, providing information about the appointment. This pre-notification window is important for your timeline: it means the earliest an appointment can begin is measured in weeks, not days.

On an ongoing basis, the principal must review each appointed representative at least every 12 months. That review covers the fitness and propriety and competence of senior management at the appointed representative, the appointed representative's financial position, and the adequacy of the principal's own controls and resources to oversee it. Principals must also complete a self-assessment document that identifies risks and gaps in their oversight, have it reviewed and signed off by their governing body at least every 12 months, and keep it for at least six years.

The reporting requirements were strengthened too. Principals must provide the FCA with complaints and revenue data for their appointed representatives annually, within 60 business days of the principal's accounting reference date. Changes to the information held on an appointed representative must be reported within 10 business days of the change. Principals must also hold professional indemnity insurance covering the activities of their current and former appointed representatives, including introducer appointed representatives, where required.

Regulatory hosting as a way in

One route to becoming an appointed representative is through a regulatory host. A regulatory host is a principal whose main business is providing this hosting service to appointed representatives, rather than running its own front-line regulated business alongside them. PS22/11 formally added an option of regulatory hosting services to the information principals provide, and the FCA now expects a firm intending to provide regulatory hosting services to notify it at least 60 calendar days before starting.

For a firm that wants to test a business model, launch quickly or avoid the cost of full authorisation, a regulatory host can offer a faster and more structured way in than seeking out a principal that happens to have spare capacity. The trade-off is the same as with any principal relationship: you operate within the host's permissions and under its oversight, and the host remains responsible to the FCA for your regulated conduct.

Whichever principal you choose, the due diligence works both ways. A well-run principal will scrutinise you closely before appointment, and you should scrutinise the principal in return, because your ability to carry on regulated business depends on its authorisation, its financial health and the quality of its oversight. If you want help mapping activities to the right route, our authorisation support sets out the options in more detail.

Conclusion

Becoming an appointed representative can be a practical way to carry on regulated activities without holding your own authorisation, but it is not a light-touch option. The section 39 exemption depends on a genuine relationship with an authorised principal that accepts responsibility for your conduct in writing, and since PS22/11 the FCA expects principals to run robust due diligence, review you at least every 12 months, and report detailed data on your activities.

That means the practical work of becoming an appointed representative is largely about choosing the right principal and being ready to demonstrate that you are fit, proper and financially sound. Plan around the 30 calendar day pre-notification period, be clear about whether you need an introducer or full appointment, and treat the principal's oversight as a feature rather than a burden. If you are weighing the appointed representative route against direct authorisation, our pricing options can help you compare the cost of each path.

Frequently asked questions