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    What should you consider when looking for a principal firm?



    We often speak to firms that come to us after having spoken to numerous different principal firms where they have been told several different processes and time frames for becoming an appointed representative (“ARs”). As the regulated entity, the FCA place emphasis on principal firms ensuring that they are appointing the right ARs but it’s just as important that an AR feels they are equipped to choose the right principal for them.

    What is a principal firm?

    A principal is a firm which is directly authorised by the Financial Conduct Authority (“FCA”) to provide regulated financial products and services and has appointed another (often unregulated) firm to provide regulated products and services to consumers. A principal is responsible for ensuring its ARs meet the FCA’s requirements and must undertake regular checks and monitoring to ensure that neither they nor their AR cause consumer harm.

    What is an appointed representative?

    An AR can conduct regulated financial services products and services where they are correctly authorised via their principal firm. This is undertaken via a contractual agreement in which the principal firm must take full responsibility for ensuring that the AR complies with relevant regulations. An AR’s details can be found under it’s Principal firms record on the FCA’s Financial Services Register.

    What should you consider when choosing a principal?

    There are several areas you may wish to consider when choosing a principal firm.


    One of the first things you must consider is what permissions you need to offer the products/services you wish to offer. For example, if you are a retailer looking to introduce your customers to finance options relating to the purchase of your goods, you would need credit broking permissions. Therefore, the principal firm which you work with must be authorised for credit broking permissions. In essence, the principal firm must hold the permissions you require to conduct regulated activities.

    Due diligence process

    It’s extremely important to check the details of the principal firm. This should include looking at the FCA’s Financial Services Register, where you can check that the firm is authorised, what permissions they carry and who is responsible for the firms conduct and compliance. You should also check the Companies House register where you can check that the firm is up to date with their filings along with the details of those which run and own the firm.

    A principal should also conduct due diligence checks on you and your firm. This is a requirement for them under FCA rules and guidance and supports them in understanding your business and preparing to complete the regulatory notification they must submit.

    Good principal due diligence checks might include;

    • Conducting fitness and propriety checks and raising questions to ensure they understand about you and your business.
    • Identify potential risks in your processes and business model and work with you to mitigate or remove those risks.
    • An interview/questionnaire of directors/shareholders relating to competence and suitability. This may include testing competency with measurable training and the development of a remedial plan to deal with gaps.
    • Review of director/key personnel CVs and employment history.
    • Asking you to provide a standard Disclosure and Barring Service (DBS) check where appropriate.



    The FCA requires a principal firm to have a written agreement in place between the principal and its AR. This agreement must set out what the AR is able to do and how the principal firm will take responsibility for the conduct and activities of the AR firm.


    Once you and your principal firm agree to continue and proceed with an AR/principal relationship, the principal will need to notify the FCA that they are onboarding you as an AR. Your principal will log into the regulatory gateway and submit the notification on your behalf for FCA review and acceptance.


    A principal must submit the notification at least 30 days before the AR appointment is due to begin. However, in many cases this process takes longer than 30 days. Usually, the notification process within the FCA takes around 90 days but in some circumstances may take longer. It’s important to speak with your principal as they will likely be aware of current FCA processing times. You should build these timescales into your onboarding and due diligence plans.

    Ongoing support and monitoring

    Good principal firms provide ongoing support and monitoring for their ARs to ensure that they grow and utilise their AR status appropriately.

    Principals are responsible for their ARs on an ongoing basis, and should apply an appropriate level of oversight and monitoring to them. These might include:

    • Ongoing monitoring to ensure that your controls and resources are adequate and if they’re not, work with you to improve. These might include;
      • looking at key performance indicators and discussing these with you
      • reviewing and signing off all financial promotional/marketing material before publication
      • reviewing the quality of advice given to customers and looking at customer feedback and reviews
      • providing training
      • reviewing your financial position
    • Regular assessment of senior management’s fitness and propriety, which includes competence and capability. This is usually annually or where changes to the regulatory landscape might occur.


    Our support

    We have been operating as a principal firm since 2017. We have assisted 100s of firms by supporting them within our AR network.

    If you join us as an AR, we fully manage your FCA requirements, providing you with all the necessary policies, processes and documents to help you remain FCA compliant. You will work with our team regularly, who are there to support you and your business to offer regulated products and services to your customers.

    If you would like to know more, then please get in touch by contacting us on 01423 613335 or email




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