Understanding Appointed Representatives Under FSMA 2000

April 8, 2026
1. What is the general prohibition under FSMA?

Under section 19 of the Financial Services and Markets Act 2000 (FSMA), a person must not carry out a regulated activity in the UK, or purport to do so, unless they are an authorised or exempt person. This is known as the general prohibition, which as a general rule requires anyone carrying out regulated activities to be directly authorised by the Financial Conduct Authority (FCA) or fall within a statutory exemption.

2. What is an appointed representative?

Under section 39 FSMA, an appointed representative (AR) is classed as an exempt person to the general prohibition rule and so does not need to be directly authorised by the FCA to carry out regulated activities. Instead, they can operate under the regulatory “umbrella” of another authorised firm, known as a principal.

3. How does the appointed representative model work?

To become an AR, there must be a written agreement in place between the AR and the principal. The agreement must permit or require the AR to carry on business of a prescribed description which must be complied with, and the principal accepts responsibility in writing for these activities.

Under this model, the AR can only conduct activities expressly permitted within this agreement and within the scope of their principal’s own FCA permissions.

4. Why does the appointed representative structure exist?

The AR structure offers benefits to both ARs and principal firms.

For ARs, there is no need for direct authorisation, allowing them to leverage the full authorisation status of their principal. This means there can be faster market entry as opposed to the 6+ months full authorisation can take. Lighter ongoing compliance obligations, such as no requirement to meet solvency thresholds or maintain professional indemnity insurance also make this route attractive for ARs.

It can allow principals to expand their distribution channels through third parties. This can allow quick expansion into new sectors or with new client bases. This could for example be advantageous for insurance company principals who may wish to use ARs that are not primarily operating in the insurance sector but can offer it in connection to their products or services.

5. What is the appointed representative application process?

Deciding whether to proceed as an AR or to pursue full FCA authorisation required careful consideration, weighing up the pros and cons of both avenues.

Our regulatory team advises both principals and prospective ARs on the full range of regulatory matters. For example, helping ARs determine which permissions, if any, they will require and the most appropriate route to achieving compliance. This begins with a detailed regulated activities analysis to establish the exact scope of permissions required for the proposed activities. Once this has been defined, we provide comprehensive support throughout the FCA authorisation process, including drafting bespoke, high‑quality applications designed to minimise delays and maximise the likelihood of first‑time approval.

Contact us for expert assistance in determining whether your business requires FCA approval, or for support with preparing and submitting an FCA application.

Mark Chapman
General Counsel, Head of Commercial & Regulatory
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This reflects the law and market position at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought in relation to a specific matter.

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