UK: HM Treasury consultation on the Appointed Representatives Regime

Why should I read this?

In August 2025 HM Treasury (HMT) announced its intention to legislate to revise the UK AR regime, requiring principals to be specifically authorised to appoint ARs and expanding the remit of the Financial Ombudsman Service to the FOS to consider ARs’ conduct directly in certain circumstances. HMT is now consulting on the details of implementing these proposals in “Consultation: The Appointed Representatives Regime”, published on 12 February 2026.

See our previous client briefing:

• UK: HMT policy statement on the appointed representatives regime

What is proposed?

• Not require existing principal firms to apply for the new permission. Existing principals will be able to maintain their existing AR appointments, and appoint new ARs as necessary, as a result of deeming provisions which will deem such firms to have permission to appoint ARs.  However, the FCA will have the power to vary or withdraw such (deemed) permission.
  
  
• Potentially limit certain existing principal firms to a permission for appointing introducer appointed representatives (IARs). It is not exactly clear how this would work, but it appears that authorised firms which are principal of only IARs when the AR Approval Gateway comes in, may be deemed only to have permission to appoint IARs.
  
  
• Embed the principal permission in the new firm authorisation process. So applicant firms seeking permission to carry on regulated activities do not have to go through a separate process to act as a principal.

Extension of FOS jurisdiction to ARs

Current position

Currently FOS jurisdiction over principals for the actions and omissions of their ARs extends to:

• anything done or omitted by the AR in carrying on the business for which the principal has accepted responsibility; or
• anything for which the principal is otherwise responsible, for instance according to agency law.

If the AR’s conduct giving rise to the complaint falls outside the scope of activities for which the principal is responsible under FSMA 2000, or if responsibility cannot otherwise be established, the customer has no recourse to FOS.

Liability under the proposed rules

As is the case now, FOS will continue to handle complaints involving an AR by investigating the principal firm which has responsibility for the AR.  If FOS determines that a principal firm is responsible for misconduct involving its AR and upholds a complaint against the principal, FOS will continue to direct any appropriate redress measures to the principal firm.

In the relatively small percentage of cases in which FOS determines that a principal firm cannot be held responsible for its AR’s acts or omissions, FOS will be able to consider the complaint against the AR itself. If FOS upholds a complaint against such an AR, FOS will be able to direct any appropriate redress measures to the AR.

This approach is intended to ensure that all consumers of regulated financial services, whether dealing with an authorised firm or an AR, have access to FOS on a consistent basis.

The extension of the compulsory jurisdiction is not intended to diminish the high level of responsibility that principal firms have for their ARs, including the expectation that principals will reasonable steps to ensure that ARs are only carrying on regulated activities for which the principal has accepted responsibility.

The proposed changes to FOS’s compulsory jurisdiction are intended to apply to complaints brought to FOS that concern the acts or omissions of an AR which occurred after a specified implementation date in the future.

The changes will be effected through a combination of amendments to FSMA and scheme rules made by FOS.

Implications for initial complaint handling by firms

Authorised firms must handle customer complaints in accordance with the rules in Chapter 1 of the FCA’s Dispute Resolution and Complaints Sourcebook (DISP 1).

The UK Government does not intend to extend the application of the DISP 1 complaint handling rules to ARs.

However, the FCA will consider whether to make changes to the DISP 1 rules to ensure that, if a complaint relates to the actions or omissions of an AR, the principal will make the AR aware of the complaint. The FCA will also consider whether to place an obligation on principal firms to ensure that their ARs cooperate with FOS.

Extension of FOS jurisdiction in this way may lead to FOS making more direct awards against ARs. This could, theoretically, lead to more failures of ARs, valid claims against which are covered by the Financial Services Compensation Scheme (FSCS). The UK Government is not, however, proposing to make changes to the funding model of the FSCS to mitigate this hypothetical additional risk.

Bringing ARs within scope of the Senior Managers and Certification Regime (SMCR)

Principal firms are responsible for making sure AR staff are fit and proper and that they uphold high standards of conduct. The SMCR is the framework which sets these standards for authorised firms, including principal firms. The SMCR has completely replaced the Approved Persons Regime (APR), which previously applied to authorised firms.  However, AR firms remain subject to the APR.

The UK Government can see no justification for different and inconsistent frameworks applying to principal firms and ARs and proposes harmonisation by applying SMCR to AR staff, with it appearing that such staff might become subject to certification by their principal (although this is not completely clear from the consultation).

The three core elements of SMCR will be applied to ARs as follows:

• the SMCR general conduct rules will apply directly to all individuals in an AR (except ancillary staff), and all individuals who are themselves ARs;
• the FCA will use its existing rule-making power to require principal firms to apply fit and proper requirements to their ARs; and
• the FCA will have the ability to create a new dedicated AR Senior Management Function in principal firms (although it is not clear why this would be a new senior management function and not a prescribed responsibility).

Next steps