Read about your responsibilities as a principal firm overseeing an appointed representative.
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An appointed representative (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:
Your responsibilities
As a principal firm, you must:
- Have a written AR agreement. This should set out what business the AR can do.
- Assess the AR before appointing them to ensure they're fit and proper, financially stable and suitable to carry out business for your firm.
- Notify us at least 30 days before the appointment takes effect. Learn more about onboarding new ARs.
- Regularly review the AR’s activities, business and senior management.
- Ensure data we hold on your AR is up to date and notify us of any changes.
- Take reasonable steps to ensure your AR acts within the scope of their appointment.
- Always ensure your firm has adequate skills and resources to oversee your AR, including if an AR's business changes or expands.
- Provide complaints and revenue data for AR annually via REP025.
- 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.
- Ensure 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 are responsible for your ARs on an ongoing basis and should apply an appropriate level of oversight and monitoring.
Assess senior management
Assess senior management at your ARs for fitness and propriety, which includes competence and capability.
Put safeguards in place
If you delegate functions or tasks to an AR, put safeguards in place – this includes identifying conflicts of interest and implementing enhanced monitoring.
Principal firms should also have specific policies and procedures to manage the financial crime risks associated with their ARs, including financial crime risk assessments and on-site visits or audits (where appropriate). Read more about our expectations.
Assess your controls and resources
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.
Monitor and assess risk of harm
Monitor and assess the risk of harm to consumers and market integrity.
Apply employee standards
Oversee ARs to the same standard as your employees.
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.
Introducer appointed representatives
Introducer appointed representatives (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. For example, 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.
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 conduct.
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.
Annual self-assessment
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.
It should be:
- A single document designed to identify risks and gaps in compliance.
- Reviewed and signed off by your governing body at least every 12 months.
- Kept for at least 6 years and made available to us if requested.
Consumer Duty
If your firm has retail consumers, or you have a material influence over or determine retail consumer outcomes (even if you don’t have a direct consumer 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 consumers’ needs first.
When to notify us
Apart from notifying us when you want to onboard an AR, here are the requirements for other common notifications.
Changes to information about your AR
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.
If you intend to provide regulatory hosting services
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 Handbook.
Read more about regulatory hosting services.
Providing complaints data and revenue information for ARs
You must do this annually.
Send us the data through your regular reporting mechanism within 60 business days of your annual reporting date.
