On 21 April 2026, the Financial Conduct Authority (FCA) published its review of good practice and areas for improvement that is has seen in its supervisory work relating to inactive appointed representatives (ARs).

Key findings

The FCA’s key findings from its review include:

  • Lack of AR regulated revenue reported to the FCA: The FCA highlighted that principals with certain business models and in some sectors are more likely to report ARs that carry on no regulated activities for a period of time. In other cases, this lack of reported activity reflected weaknesses in the way principals classified or reported regulated and non-regulated business through the REP025, rather than an absence of regulated activity itself. As a result, the FCA highlighted that firms need to oversee all regulated activities by ARs and accurately represent revenue generated and its origins. Good practice included clear expectations set at onboarding, clear understanding of AR activity, active and data-led oversight and early intervention. Areas for improvement included where principals could not demonstrate effective oversight or lacked a clear and up to date understanding of their ARs’ business models.
  • Lack of engagement with inactive ARs: The FCA highlighted that that some principals allowed ARs to remain within their network for extended periods without carrying on regulated activities but did not engage with the AR to understand the reasons for this or reassess whether the AR relationship remained appropriate. Good practice included suspension, when the principal is actively investigating the AR and there is a realistic prospect of resolution, but that this should not be used as an indefinite alternative to reassessing the appropriateness of the AR relationship. In addition, the FCA also made clear that where concerns are not resolvable within a reasonable timeframe, principals should consider whether they need to take further action, including termination. 
  • Insufficiently monitoring consumer-facing materials: The FCA set out that some principals did not adequately monitor how ARs presented themselves to consumers, which can increase the risk of misleading consumers about their regulatory status, particularly where ARs had not actively carried on regulated activities for some time.  Good practice included that firms should ensure that any references on AR websites use proper terminology to avoid confusion.
  • AR agreements need to meet regulatory requirements: The FCA emphasised that robust, compliant AR agreements are a foundational component of effective oversight and support from principals in exercising appropriate control over AR activities throughout the lifecycle of the relationship. The FCA also made clear that some AR agreements it reviewed did not meet regulatory requirements, including where principals were not clearly accepting responsibility for the regulated activities carried on by ARs and not including required terms set out in or under section 39 of the Financial Services and Markets Act 2000 and chapter 12, section 5 of the Supervision Manual 12.5, and so that FCA has asked principals to amend such terms to address deficiencies.