HM Treasury has opened a consultation on proposed changes to the appointed representatives (AR) framework, building on its policy statement published in August 2025. The reforms are intended to reinforce confidence in the regime, improve standards of consumer protection, and preserve its role as a cost-efficient route for firms to carry on regulated activities without full authorisation. In doing so, the government aims to continue supporting market entry and competition.

The consultation sets out several key areas for reform, including the following.

New FCA Permission for Principal Firms

The government proposes that firms wishing to act as principals should be required to obtain a specific FCA permission. This would operate as a regulatory gateway, similar in structure to section 55NA of the Financial Services and Markets Act 2000. The objective is to enable the FCA to assess whether prospective principals have appropriate competence, financial resources, governance arrangements, and oversight systems before taking on ARs. Further requirements governing principal–AR relationships would be set out in FCA rules.

Extension of Financial Ombudsman Service Coverage

It is proposed that the compulsory jurisdiction of the Financial Ombudsman Service (FOS) should be expanded through amendments to FSMA. This would ensure that consumers receive consistent access to the FOS, regardless of whether they deal with an authorised firm or an AR. Where a principal cannot be held responsible for the conduct in question, the FOS would be empowered to consider complaints directly against the AR.

Application of the SMCR to ARs

The consultation also proposes extending the Senior Managers and Certification Regime to cover appointed representatives. Under this approach, principal firms would be responsible for applying fit and proper standards to AR personnel. In addition, a specific senior management function for AR oversight may be introduced.

Stakeholders are invited to submit responses by 9 April.

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