In August 2025, HM Treasury published its Policy Statement on The Appointed Representative Regime (here) (“the Policy Statement”). The Policy Statement provides welcome, long term certainty for a regime that in recent years has endured negative coverage and intense regulatory scrutiny. Currently 34,000 Appointed Representatives (“AR”) operate under approximately 2,400 FCA authorised firms in a mushrooming that had not been anticipated when the regime was first conceived. The Government has recognised that the risk to consumers can be managed with a preserved but recalibrated and properly supervised regime given that the virtues of it are many and manifest. It speaks perfectly to the growth agenda of the current government in providing a gateway for new firms to enter the market whilst benefiting from the experience and expertise of already established FCA authorised firms.
A Summary
The 19-page Policy Statement can be summarised as follows:
- The UK Governments view the regime positively as it provides a proportionate and cost-effective way for firms to engage in regulated activity in the UK without being authorised by the FCA, thus allowing for a wide range of participants to enter the market, promoting competition, supporting innovation and contributing to economic growth.
- An intention to adjust the existing legislative framework to engender a proportionate level of protection to consumers of AR firms whilst preserving the comprehensive scope the AR regime currently covers, thereby allowing the financial service sector and, in turn, the UK economy to continue to benefit from the regime.
A Framework (slightly) Reformed
The two, key reforms to the legislative framework are as follows:
- A new regulatory gateway. Authorised firms who wish to use ARs will now need to obtain a specific FCA permission. In turn, the FCA will ensure those authorised firms have the required expertise and resources to properly oversee the ARs effectively.
- Complaints Redress. Consumers will now have recourse to the Financial Ombudsman Service (FOS) if complainants are unable to settle a dispute with the AR, where the authorised firm is not responsible for the issue in the dispute.
The changes do not change the scope (of the AR regime) but, rather, presented as a necessary amendment to rules governing a sector which the FCA with its rule-making powers had recently endeavored to supervise with greater rigour. In December 2022, the FCA instituted a range of measures including the need for an annual review by a principal of its ARs, annual (FCA) AR revenue and complaints reporting, and advance notice to the FCA of new AR appointments. However, those moves did not address the perceived gaps in oversight (by and) of principals and in redress for consumers.
In the round, the slightly revised framework is one that regulators and the market can be content with. Further, it accords with the Government’s vision as set out in their Regulation Action Plan (here): specifically, to support growth; be targeted and proportionate; transparent and predictable; and evolve to keep pace with innovation.
Closing Remarks
The Policy Statement should bring to an end a period of uncertainty for the AR sector. Further details on the changes are expected in due course but one might expect that the AR regime will remain in the spotlight and so principals and their ARs should, whilst quietly rejoicing, ensure relevant systems and controls are in situ and fully executed.
If you are a principal looking to review your AR processes, Blueprint GRC would be delighted to continue this conversation and help ensure you remain on a compliant path.
