---
title: HM Treasury Review of the Appointed Representative (AR) Regime – What It Means for Principal Firms and AR Networks
description: Appointed Representatives, Regulation, compliance, digital, RegTech, practice management, client-centric, risk, Governance, Risk, ConsumerDuty, Supervision, FCA, governance,
image: https://resources.model-office.co.uk/hubfs/pexels-matreding-16124523.jpg
---

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## [HM Treasury Review of the Appointed Representative (AR) Regime – What It Means for Principal Firms and AR Networks](https://resources.model-office.co.uk/hmt-appointed-representative-regime-review)

 \[fa icon="calendar"\] Feb 12, 2026 4:51:17 PM / by [Chris Davies](https://resources.model-office.co.uk/author/chris-davies)

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The recent [HMT consultation on reform of the Appointed Representative (AR) regime](https://www.gov.uk/government/consultations/consultation-the-appointed-representatives-regime/consultation-the-appointed-representatives-regime) signals that the structure remains under close scrutiny. While the Financial Conduct Authority (FCA) has already strengthened its supervisory framework through PS22/11, HMT is clearly testing whether further structural reform is required to address harm within principal–AR models.

The direction of travel is consistent: greater accountability on principal firms, clearer lines of responsibility, and stronger data-led supervision. For AR networks, this is no longer about periodic audit and file checks. It is about demonstrable, systemised oversight embedded into governance, risk and control frameworks.

The FCA’s [PS22/11](https://www.fca.org.uk/publications/policy-statements/ps22-11-improving-appointed-representatives-regime) introduced enhanced reporting requirements, tighter due diligence expectations, and clearer expectations around oversight and termination. The HMT review builds on this by questioning whether the regime itself is sufficiently robust to prevent consumer harm, particularly where principals operate large or complex AR networks. A directive which is at the heart of the FCA’s Consumer Duty.

The implication for networks is straightforward. Informal supervision will not withstand scrutiny. Oversight must be structured, evidenced, and auditable, building data driven audit trails.

**Regulatory Context**

The FCA’s policy reforms in PS22/11 already require principal firms to:

HMT’s consultation indicates that government is willing to revisit the legislative framework if these measures do not sufficiently reduce risk.

For AR network principals, this means preparing not just for compliance with today’s rules, but for demonstrable resilience under further reforms such as:

- a new regulatory gateway for a new FCA permission for principal firms where the regulator could grant, vary restrict or withdraw this permission.
- New FCA rules for contractual requirements between principals and ARs
- ARs to be brought under the Senior Managers and Certification Regime (SMCR) across fitness, conduct and accountability standards with the principal gaining Senior management function (SMF) within principal firms for AR oversight
- Financial Ombudsman jurisdiction extended to AR firms not just principals

**What Principal Firms Now Need to Do**

**1. Formalise AR Oversight Frameworks**

**2. Strengthen Due Diligence and Onboarding**

**3. Deploy Continuous Monitoring – Not Annual Reviews**

**4. Evidence Consumer Duty Delivery Across the Network**

**5. Resource and Governance Alignment**

**What AR Member Firms Should Be Preparing**

AR firms can no longer assume the above is solely a principal issue. Governance and oversight expectations are rising across the distribution chain.

AR firms should:

Those AR firms that operate with minimal governance documentation will find this environment increasingly challenging.

**The Role of Supervision RegTech**

The shift in regulatory tone is towards structured, technology-enabled oversight. Principal firms must be able to evidence supervision at scale.

This is where platforms such as Model Office become relevant. Supervision RegTech allows principal firms to:

This is not about replacing judgement. It is about evidencing it.

For AR networks operating at scale, manual spreadsheets and dispersed documents will not withstand regulatory challenge. Structured data, audit trails and dashboard-level oversight are becoming baseline expectations.

**Key Themes Emerging from HMT + FCA Reforms**

**Practical Preparation Checklist for AR Networks**

**Final Observations**

The HMT consultation is not signalling incremental adjustment. It is testing whether the AR regime remains fit for purpose given ARs generate a disproportionate number of FOS complaints and FSCS failures.

For principal firms, this is a governance question. Can you evidence that your AR network is supervised in a way that is structured, proportionate and capable of preventing consumer harm? Those who invest now in systems-based oversight and RegTech supervision infrastructure will be better positioned if reform tightens further. The direction is clear: AR oversight must be demonstrable, data-led and embedded.

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#### Written by [Chris Davies](https://resources.model-office.co.uk/author/chris-davies)

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