Sophia Ioannou breaks down HM Treasury’s latest proposals for the Appointed Representatives regime and explains what they could mean for firms that act as principals.
HM Treasury has published a consultation proposing updates to the Appointed Representatives (AR) regime. These reforms aim to increase accountability, oversight and ensure that appropriate protection is provided to consumers.
With the consultation running until 9 April 2026, firms will need to consider how these changes could reshape their current governance and systems.
Why the Reforms?
The proposed changes to the regime are driven by the risk of consumer harm when dealing with Appointed Representatives. HM Treasury and the FCA want greater clarity over who is responsible for what, and stronger controls around the use of ARs.
What Are the Proposed Reforms?
1. Principals to seek FCA permission
FCA-authorised firms that intend to act as principals for an AR must seek FCA permission. This will allow the FCA to assess whether the principal has the required expertise, resources and systems to robustly oversee AR activities.
Existing principal firms will not need to apply for this permission and will be considered to have it already. However, the FCA will be able to vary or withdraw this permission if required. It is understood that the existing scope of the AR regime will not change, and that those firms currently using it can continue to do so without disruption.
2. Extending the scope of the Financial Ombudsman Service to ARs
The Financial Ombudsman Service (FOS) will consider complaints directly against an AR even if the principal firm is not found responsible for the conduct that the complaint relates to. Where complaints against an AR are upheld, the FOS can direct the AR to put in place redress measures.
Currently, the FOS considers complaints only where the principal firm is responsible for the act or omission.
3. Applicability of the SM&CR to ARs
ARs will be brought in scope of the SM&CR to ensure consistent frameworks apply to principal and AR firms. In-scope individuals at ARs will be subject to the conduct rules, the fit and proper assessments requirements will apply to ARs, where deemed appropriate by the FCA, and a new AR Senior Management Function role will be established at principal firms to ensure clear accountability for AR oversight.
What This Means for Firms
The proposed reforms are designed to strengthen accountability for principal firms and improve how they oversee their ARs. Under the new approach, principals would face closer scrutiny, particularly through the requirement to obtain specific FCA permission before taking on an AR. This is intended to ensure that firms have the right systems, resources and expertise in place from the outset.
The changes also aim to create greater consistency between the frameworks that apply to principals and ARs, which should support more effective and proportionate oversight across the regime.
How Thistle Initiatives Can Help
Our team has extensive experience supporting principal firms with AR onboarding, monitoring and framework design, and we can help you understand what the consultation means in practice.
Get in touch at info@thistleinitiatives.co.uk or call 020 7436 0630 to speak with our team.
Meet the Expert
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Sophia Ioannou, Consultant 
Sophia recently joined Thistle as a Consultant in the Investment Wholesale team. She holds a Bachelor of Science in Psychology from the University of Nottingham and brings a strong foundation in investment compliance. Before joining Thistle, she worked at a hedge fund where she supported regulatory development projects and contributed to policy reviews, giving her practical insight into how firms adapt to emerging requirements. She has also completed the CISI Introduction to Securities and Investment and Global Financial Compliance modules, which further strengthened her technical knowledge.