For principal firms, Appointed Representative (AR) oversight is no longer an area where broad policies and periodic reviews are enough. The FCA’s recent work on the AR regime makes it clear that principals must be able to demonstrate active, risk-based and well-documented oversight of their ARs throughout the relationship.
This is becoming harder to achieve where monitoring is spread across spreadsheets, email trails and disconnected systems. Many firms have the right framework on paper but struggle to evidence it clearly in practice.
The scale and importance of this responsibility remain significant. FCA data published in June 2026 shows that, at the end of March, 2,431 principal firms were responsible for 33,347 Appointed Representatives, including 20,728 full ARs and 12,619 Introducer Appointed Representatives.
While the number of ARs fell slightly, regulated revenue generated by ARs increased by 7.3% in 2025 to around £13.1 billion.
The FCA noted that this indicates a greater concentration of regulated activity among a smaller number of AR-principal relationships. For principals, effective oversight therefore remains critical, even as the overall AR population declines.
The FCA’s message is becoming more specific
The FCA has highlighted weaknesses in some firms’ annual reviews, self-assessments and audit trails under the enhanced AR regime. It has also raised concerns where boards are not receiving sufficiently useful management information and where oversight of consumer-facing activity, such as websites and social media, is limited.
More recently, the FCA has focused on the risks posed by inactive ARs, warning that principals still need effective oversight even where regulated activity appears limited or absent.
Taken together, these findings underline the importance of ongoing oversight, timely escalation and clear governance across a principal’s AR population.
Inactive ARs are a particular risk area
In April 2026, the FCA specifically highlighted the potential risks associated with inactive ARs and set out examples of good and poor practice for principal firms.
Inactive ARs create a specific challenge because firms cannot rely on transaction monitoring alone to satisfy themselves that the arrangement remains appropriate. Where an AR is carrying out little or no regulated activity, principals still need to understand the purpose of the relationship, whether the AR continues to pose conduct or reputational risk, and whether the continued appointment remains justified.
This is especially important because an inactive AR may still appear to consumers to have the backing of an authorised firm, even where actual regulated activity is very limited. This creates a risk that principals may underestimate the exposure associated with these relationships.
Why many firms struggle
In practice, AR oversight often breaks down not because firms lack a framework, but because that framework is fragmented. Complaints data may sit in one system, training records in another, attestations in emails, file reviews in spreadsheets and governance actions in committee papers.
As a result, firms can find it difficult to answer simple but important questions quickly and consistently. This can make it harder to identify changes in risk, track overdue reviews, evidence challenge and demonstrate that issues have been escalated appropriately.
When this happens, the oversight model may exist on paper, but the firm is less able to demonstrate that it is working effectively in practice.
How digital compliance tools can help
Digital compliance management tools can help principal firms bring AR oversight into a more structured and evidence-based environment. A centralised platform can provide a clearer view of each AR relationship across onboarding, ongoing monitoring, annual reviews and offboarding.
This type of system can improve management information by bringing together indicators such as complaints, breaches, file review outcomes, training completion, revenue changes and periods of inactivity. This makes it easier for compliance teams and boards to identify trends, focus attention on higher-risk ARs and respond earlier when concerns begin to emerge.
How Complyport can help
This is where ComplyPortal, Complyport’s cloud-based Compliance Management System, can play an important role.
By bringing AR records, policies, monitoring activities, complaints, reviews and action tracking into one centralised environment, ComplyPortal helps firms create a clearer audit trail of their oversight activities, improve consistency and make it easier to demonstrate how AR risks are identified, monitored and managed.
Rather than relying on fragmented records across spreadsheets, emails and separate systems, firms can maintain a more structured view of their compliance activities and the evidence supporting them.
Looking to strengthen and simplify your AR oversight processes?
Discover how ComplyPortal can help you centralise compliance activities, strengthen oversight and maintain a clearer audit trail.
