Appointed Representative Policy and Playbook: What Principal Firms Must Get Right Before the FCA Gets Involved

The appointed representative regime was designed to widen access to regulated markets. But for principal firms, it comes with a burden of responsibility that many have consistently underestimated — and that the FCA has spent the last several years making significantly harder to ignore.

Following its thematic review and the sweeping changes introduced under PS21/3, the regulator has made clear that principal firms are fully accountable for the conduct, competence, and compliance of every AR they appoint. If your AR causes consumer harm, mis-sells a product, or breaches regulatory requirements, the consequences land with you — not just with them. That reality demands a policy and oversight framework that is genuinely fit for purpose.

In this episode, we walk through what a robust Appointed Representative Policy and Playbook looks like, why so many principal firms are still exposed, and how to build an oversight structure that satisfies regulatory expectations and protects your firm.

We cover:

— What the FCA's reforms to the AR regime actually require of principal firms, and the specific due diligence, oversight, and reporting obligations that came into force following PS21/3

— How to structure an AR appointment process that assesses fitness and propriety, business model viability, and regulatory risk before onboarding — not after problems emerge

— What your Appointed Representative Policy needs to contain, including governance responsibilities, monitoring frameworks, escalation procedures, and exit arrangements

— The ongoing oversight programme your firm needs to operate — how frequently to review AR activity, what management information to collect, and what triggers should prompt enhanced supervision or termination

— How to evidence that your ARs are operating within the scope of your permission and not straying into regulated activities you haven't authorised or don't hold permissions for

— Consumer Duty implications for principal firms — how the outcomes-focused framework applies across your AR network and what you need to do to demonstrate that customers are receiving good outcomes regardless of which entity they're dealing with

— Common failings identified by the FCA in thematic reviews of principal firm oversight, and the remediation steps firms have been required to take

— When and how to terminate an AR relationship — the process, the documentation, the regulatory notification requirements, and how to manage the transition to protect customers

Whether you oversee a single AR or manage a large network, the regulatory expectations are the same. This episode gives you a clear, practical playbook to meet them.

Resources mentioned in this episode:

— FCA PS21/3 — Strengthening the appointed representatives regime

— FCA AR Regime Thematic Review findings: fca.org.uk

— SUP 12 — Appointed Representatives sourcebook

The Compliance Playbook (free resource): https://bit.ly/CP202602A — practical guidance on SMCR responsibilities mapping, AML risk assessments, operational resilience planning, and more. Built by qualified regulatory consultants. No email capture, no sales pitch.

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Compliance Consultant — Making Compliance Work.