Appointed representatives and principals: consumer credit

An appointed representative is a firm or individual that carries on regulated activities under the supervision of another firm we directly authorise. Find out what this means for consumer credit firms.

Responsibilities of a principal

If your firm is directly authorised by us, it is known as the ‘principal’ and you will be responsible for ensuring any appointed representatives meet our requirements. We will not have any direct relationship with the appointed representative.

You will also take full responsibility for ensuring your appointed representatives comply with our rules. There must be a written contract between you as the principal and your appointed representative that documents the arrangement between you both.

Before entering an agreement with an appointed representative, you will need to carry out sufficient checks on the firm or individual. These are to ensure the appointed representative is financially stable and they have achieved, and are maintaining, a satisfactory level of competence.

As a principal you must notify us of any firm you appoint as an appointed representative. Where applicable, you must also approve individuals carrying out a controlling function within your appointed representative firm before it carries out regulated activities.

Once you agree to be a principal, you are accountable for the range of activities your appointed representatives carry out, including:

  • the products they sell and arrange
  • any advice they give to customers, and
  • ensuring they deliver the six ‘fair treatment of customers’ outcomes in the same way a directly authorised firm would

You will not be able to be a principal for another firm’s consumer credit activities while you have interim permission. 

Responsibilities as an appointed representative

If you are an appointed representative you will need to understand and comply with the regulatory requirements for the business you conduct.

A business cannot be an appointed representative for a regulated activity if:

  • it does not have a contract with a principal firm covering its regulated business
  • its principal firm has not accepted responsibility in writing for the regulated activity the business undertakes
  • the firm that the business wants to act as its principal holds only an interim permission for the relevant credit activity
  • it operates a credit reference agency
  • it provides credit (unless the credit is free of interest and any other charges)
  • it is authorised for another activity

The exceptions to this are:

  • a firm with interim permission for a credit activity may also be an appointed representative for an activity regulated under the Financial Services Markets Act that is not covered by its interim permission
  • a firm with limited permission for certain credit activities will be able to be an appointed representative for other regulated activities, eg a motor dealer with limited permission to carry on credit broking can also be an appointed representative insurance intermediary

As an appointed representative you must allow the principal access to your staff, premises and records so the principal can carry out the necessary oversight and monitoring of your business.

A firm that intends to operate as an appointed representative in the longer term has to make arrangements with an authorised firm.

Agents

A firm that wants to act only as an agent of an authorised firm may not need authorisation.

This depends on whether the agent is acting on behalf of a single authorised firm (in the name of that firm) and is not conducting their own business.

It can also depend on how much control the firm has over the agent, how much the agent is integrated into its business and whether the agent deals with the customers in their own right.

This will usually apply only in relation to an individual.

There is guidance on this in our Perimeter Guidance (PERG) at 2.3.5G to 2.3.11G. The Consumer Credit Sourcebook (CONC) 14 sets out requirements on firms appointing an individual as an agent.

Further information

We have further information on ARs and principals for other regulated firms.