HMT consultation on the Appointed Representatives Regime

HMT has finally published its consultation on the AR Regime which first started under the previous Government in 2021, although to be fair this Government put out a high-level policy statement supporting the AR regime in August 2025 and so this consultation is a follow on from that. This is another example of the U-turns from the FCA and HMT supporting the growth and competitiveness agenda. ARs were getting bad publicity back in 2021, mainly due to David Cameron’s involvement in the Greensill scandal, where the only regulated bit of Greensill was an AR.

The consultation is open for until April 2026 and ITC will be responding on your behalf. If the proposals go through then this will require changes to legislation and FCA rules, which may also need to be consulted on, and so it may not be until 2027 at the earliest that we see the new regime in operation.

The 3 main points in the consultation are:

1. Introducing a specific FCA permission to act as a principal firm

   This is similar to what was introduced previously for approving financial promotions. However, existing principal firms, such as ITC, will not need to apply for this permission and will be basically “grandfathered” over into the new regime. HMT / FCA believe that this will provide more focus and oversight of firms wishing to become principals. There are currently around 2,400 principal firms overseeing 34,000 ARs and ITC is one of the largest principals in the consumer credit and general insurance space.

2. Extension of FOS jurisdiction to ARs
   This is for the rare cases where an AR does something outside the Principal / AR agreement and will enable the FOS to adjudicate directly against the AR. Unfortunately, they don’t give any examples of where this might arise. One possibility is where a motor dealer sells an unregulated warranty / service agreement that the FOS then determines is actually an insurance contract, and adjudicates against the AR. However, a couple other points to note on this, is that FOS is subject to reform anyway and so this “power” for them to determine what a contract of insurance is (rather than a court) may fall away, and the FOS should also be more joined up with the FCA. The FCA is also taking a greater interest in unregulated (financial service) products sold by ARs and receives data on this under regulatory returns from their Principal Firm. If this does go through, the FCA will consider whether to make changes to the DISP rules to consider how ARs handle complaints and deal with the FOS.
   
   
3. Bringing ARs within scope of the Senior Managers and Certification Regime
   This seems sensible to have just one consistent regime rather than ARs still being under the old Approved Persons Regime. This will also formally bring staff at the ARs involved in regulated financial services into the scope of the Conduct Rules, which in turn will require the reporting of disciplinary action taken against staff for breaching the Conduct Rules. Whilst ITC already provide training on these matters and require reporting of disciplinary action taken against staff, this may require tweaking once the new rules are determined and in place. There is also recognition that SM&CR is also subject to its own reform and so that will also be reflected in any future changes in the AR regime.

ITC has a good working relationship with the FCA and will continue to present your views to ensure that regulation remains proportionate and that customers are continuing to get good outcomes.