FCA authorisation or Appointed Representative?

Nearly all financial services in the UK must be authorised by the Financial Conduct Authority. There are two routes: apply for direct authorisation, or become an Appointed Representative operating as an agent of a firm that is already authorised - the AR’s Principal. Which suits a business depends on the range of activities it intends to carry out, the resources it can commit to compliance, and how much independence it wants.

Direct authorisation

A directly authorised firm holds its own permissions from the FCA. It answers to the regulator directly, sets its own compliance arrangements, and is not dependent on another firm’s willingness to keep an appointment in place.

That independence comes with the full weight of the obligations: the application itself, the regulatory business plan, individual approvals for key personnel, and ongoing reporting and supervision.

Appointed Representative

An AR carries out a limited range of regulated activities under the permissions of its Principal. The Principal is responsible for the AR’s regulated activities, which means it also supervises them.

The route is quicker to start and lighter on the firm’s own compliance infrastructure. In exchange, the AR operates within boundaries the Principal sets, and its ability to trade depends on the appointment continuing. The requirements sit in SUP 12 (opens handbook.fca.org.uk in a new tab) of the FCA Handbook.

Within the AR category, an Introducer Appointed Representative is more restricted still - limited to making introductions and distributing approved promotions.

Choosing between them

The considerations that usually decide it:

• Range of activity. AR status covers only what the Principal permits and holds permissions for. A firm intending to operate across a broad range may find the constraint binding.
• Compliance resource. Direct authorisation requires the firm to build and maintain its own compliance function. AR status borrows the Principal’s.
• Independence. An AR’s permission to trade rests on the appointment. If the Principal withdraws it, the activity stops.
• Timescale and cost. The AR route is generally faster to start, which matters where a business needs to trade sooner rather than later.

Neither route is better in general. The question is which fits what the business actually intends to do - and firms that start as an AR and later outgrow it can apply for direct authorisation at that point.