Principal firms are responsible for making sure their Appointed Representatives (ARs) comply with our rules. Ineffective oversight of ARs was putting consumers at risk of being misled and mis-sold, and potentially undermining market integrity. So we introduced new rules[1] in 2022 to improve principals' oversight of their ARs, increase the information they give us and raise standards across financial services.
Suitability and treatment/Confidence
Suitability and treatment icon
Outcome 1: Stronger oversight by principals to reduce harm caused through ARs
| Metric code | Metric description | Source | Baseline Value | Baseline Value | Year 1 values | Year 2 values | Year 3 values | Latest status (year 3 value compared to baseline) |
|---|---|---|---|---|---|---|---|---|
| OAR1-M01 | Reduction over time in volume of complaints to firms about principal firms (P) compared to non-principal firms (NP) (per £1m of revenue from regulated activities) FCA firm complaints data/FCA retail mediation activities return data | FCA data | Firm complaints (2020): Overall average | Firm complaints (2021): Overall average | Firm complaints (2022): Overall average | Firm complaints (2023): Overall average | Firm complaints (2024): Overall average | |
GI intermediaries – 65.0 (NP), 81.3 (P) | GI intermediaries – 56.1 (NP), 118.2 (P) | GI intermediaries – 58.6 (NP), 111.6 (P) | GI intermediaries – 60.9 (NP), 70.3 (P) | GI intermediaries – 68.01 (NP), 55.2 (P) | Improved | |||
Advisers & intermediaries – 2.5 (NP), 3.6 (P) | Advisers & intermediaries – 2.6 (NP), 3.5 (P) | Advisers & intermediaries – 2.9 (NP), 5.2 (P) | Advisers & intermediaries – 1.4 (NP), 5.3 (P) | Advisers & intermediaries – 1.4 (NP), 7.9 (P) | Declined | |||
Mortgage intermediaries – 6.1 (NP), 8.8 (P) | Mortgage intermediaries – 5.0 (NP), 6.3 (P) | Mortgage intermediaries – 4.1 (NP), 8.4 (P) | Mortgage intermediaries – 4.8 (NP), 4.9 (P) | Mortgage intermediaries – 5.0 (NP), 4.8 (P) | Improved | |||
Firm complaints (2020): <200k | Firm complaints (2021): <200k | Firm complaints (2022): <200k | Firm complaints (2023): <200k | Firm complaints (2024): <200k | ||||
| GI intermediaries – 23.1 (NP), 742.6 (P) | GI intermediaries – 29.6 (NP), 262.2 (P) | GI intermediaries – 65.3 (NP), 77.4 (P) | GI intermediaries – 111.6 (NP), 161.2 (P) | GI intermediaries – 45.0 (NP), 864.2 (P) | Declined | |||
| Advisers & intermediaries – 1.6 (NP), 3.9 (P) | Advisers & intermediaries – 3.4 (NP), 3.1 (P) | Advisers & intermediaries – 3.4 (NP), 2.3 (P) | Advisers & intermediaries – 4.8 (NP), 7.3 (P) | Advisers & intermediaries – 3.7 (NP), 19.5 (P) | Declined | |||
| Mortgage intermediaries – 10.7 (NP), 2.6 (P) | Mortgage intermediaries – 4.0 (NP), 9.4 (P) | Mortgage intermediaries – 3.1 (NP), 7.1 (P) | Mortgage intermediaries – 2.3 (NP), 6.8 (P) | Mortgage intermediaries – 1.9 (NP), 5.5 (P) | Declined | |||
| £200k-1m | £200k-1m | £200k-1m | £200k-1m | £200k-1m | ||||
| GI intermediaries – 6.0 (NP) 15.2 (P) | GI intermediaries – 6.1 (NP), 17.3 (P) | GI intermediaries – 11.4 (NP), 19.4 (P) | GI intermediaries – 5.6 (NP), 20.6 (P) | GI intermediaries – 5.9 (NP), 20.7 (P) | Little or no change | |||
| Advisers & intermediaries – 1.1 (NP), 1.7 (P) | Advisers & intermediaries –1.7 (NP), 2.1 (P) | Advisers & intermediaries –1.8 (NP), 2.2 (P) | Advisers & intermediaries –0.6 (NP), 1.1 (P) | Advisers & intermediaries – 0.6 (NP), 1.6 (P) | Little or no change | |||
| Mortgage intermediaries – 2.8 (NP), 3.7 (P) | Mortgage intermediaries – 2.4 (NP), 2.3 (P) | Mortgage intermediaries – 3.4 (NP), 2.4 (P) | Mortgage intermediaries – 1.6 (NP), 9.3 (P) | Mortgage intermediaries – 1.5 (NP), 3.0 (P) | Little or no change | |||
| £1-5m | £1-5m | £1-5m | £1-5m | £1-5m | ||||
| GI intermediaries – 17.1 (NP) 21.1 (P) | GI intermediaries – 29.3 (NP), 18.4 (P) | GI intermediaries – 33.8 (NP), 20.2 (P) | GI intermediaries – 17.5 (NP), 16.6 (P) | GI intermediaries – 15.8 (NP), 14.2 (P) | Improved | |||
| Advisers & intermediaries – 2.1 (NP), 2.5 (P) | Advisers & intermediaries –1.7 (NP), 4.9 (P) | Advisers & intermediaries – 2.2 (NP), 3.9 (P) | Advisers & intermediaries – 1.0 (NP), 1.4 (P) | Advisers & intermediaries – 0.8 (NP), 1.3 (P) | Little or no change | |||
| Mortgage intermediaries – 4.7 (NP), 8.7 (P) | Mortgage intermediaries – 5.7 (NP), 4.1 (P) | Mortgage intermediaries – 3.5 (NP), 8.8 (P) | Mortgage intermediaries – 2.8 (NP), 2.4 (P) | Mortgage intermediaries – 2.3 (NP), 6.5 (P) | Little or no change | |||
| >5m | >5m | >5m | >5m | >5m | ||||
| GI intermediaries – 84.1 (NP), 90.4 (P) | GI intermediaries – 69.7 (NP), 138.7 (P) | GI intermediaries – 53.3 (NP), 159.1 (P) | GI intermediaries – 75.4 (NP), 78.7 (P) | GI intermediaries – 84.0 (NP), 59.1 (P) | Improved | |||
| Advisers & intermediaries – 2.8 (NP), 3.8(P) | Advisers & intermediaries – 4.5 (NP), 3.4(P) | Advisers & intermediaries – 5.5 (NP), 5.7 (P) | Advisers & intermediaries – 2.1 (NP), 6.0 (P) | Advisers & intermediaries – 2.2 (NP), 8.7 (P) | Declined | |||
| Mortgage intermediaries – 3.2 (NP), 8.7 (P) | Mortgage intermediaries – 7.1 (NP), 6.6 (P) | Mortgage intermediaries – 7.3 (NP), 8.8 (P) | Mortgage intermediaries –13.6 (NP), 4.9 (P) | Mortgage intermediaries –14.6 (NP), 4.7 (P) | Improved |
| Metric code | Metric description | Source | Baseline Values | Year 1 values | Year 2 values | Year 3 values | Latest status (year 3 value compared to baseline) |
|---|---|---|---|---|---|---|---|
| OAR2-M01 | Increase in the withdrawal rate following notifications by principal firms wanting to add new ARs in the short-to-medium term. Increase in the rejection, withdrawal and refusal rate of applications for FCA approval of individuals to perform controlled functions in ARs in the short-to-medium term. | FCA data | 3.8% of AR notifications (2021) | 1.6% of AR notifications (2022) | 5.9% of AR notifications (2023) | 3.7% of AR notifications (2024) | Little or no change |
| 3.0% of individual approval applications (2021) | 2.8% of individual approval applications (2022) | 6.5% of individual approval applications (2023) | 3.5% of individual approval applications (2024) | Improved | |||
| OAR2-M02 | Increase in the volume of FCA supervisory cases and volume of intervention tools linked to ARs in the short-to-medium term | FCA data | 1,115 Supervisory cases opened (2020) 3,182 Supervisory cases opened (2021) Under enhanced methodology* 1,483 Supervisory cases opened (2020) 3,676 Supervisory cases opened (2021) | 1,673 Supervisory cases opened (2022) 2,655 Supervisory cases opened (2022)
| 1,633 Supervisory cases opened (2023) 2,425 Supervisory cases opened (2023) | 1,933 Supervisory cases opened (2024) 3,199 Supervisory cases opened (2024) | Improved |
Interventions: At least
(2023) | Interventions: At least
(2024) | Little or no change | |||||
| OAR3-M01 | The proportion of firms who report that oversight of Appointed Representatives in their sector has improved in the last 12 months. | FCA and Practitioner Panel survey[2] | % of principal firms who reported oversight has: Improved – 56% Stayed the same – 30% Don’t know – 7% Not applicable – 7% Decreased – 1% (2022/23) | N/A |
Improved – 63% Stayed the same – 28% Don’t know – 4% Not applicable – 4% Decreased – 1% (2023/24) | Improved – 60% Stayed the same – 29% Don’t know – 6% Not applicable – 5% Decreased – 1% (2024/25) Difference between year 3 and baseline value is not statistically significant. | Little or no change |
What the latest metric values tell us
Over the last 3 years, we did a significant amount of work to improve principals’ oversight of their ARs and raise standards. There has been progress, but there is still more to do to reduce harm caused through ARs.
Our complaints data shows an improvement in the average number of complaints generated by principals compared to non-principals across 2 of our 3 key portfolios. In general insurance intermediaries, principals received approximately 70% more complaints in our baseline; they now have approximately 20% fewer than non-principals. In mortgage intermediaries, principals have approximately 5% fewer complaints. However, in advisers and intermediaries, a spike in complaints among larger firms has widened the gap between principals and non-principals. Principals are now generating 470% more complaints than non-principals this year, and 270% more last year.
The improvements in general insurance and mortgages portfolios have been largely driven by improvements by principals with higher revenues. Smaller principals continue to generate more complaints than non-principals. A likely driver of the increase in the advisers and intermediaries portfolio is an increase in complaints about ongoing financial advice services.
We strengthened scrutiny through increased operational capacity and stronger challenge on notifications and applications. We also improved the forms used by principal firms to notify us of the appointment of an AR. In 2024, the rate of withdrawal by firms of AR appointments following scrutiny decreased to 3.7%. Our rejection, withdrawal and refusal rate for applications to perform controlled functions related to an AR also decreased to 3.5%. This is on average a 42% reduction to the 2023 rates. This indicates improved due diligence by principals and improved assessments when submitting their applications. Throughout, we have continued to apply robust standards at the authorisation gateway.
New data and tools enabled us to focus on outliers and higher risk firms. Leading to more supervisory cases compared to our baseline.
We took prompt action to stop ongoing harm, resulting in a year-on-year increase in interventions. For the calendar year 2024, following our supervisory interventions, at least 32 principal firms have applied to restrict their activities, 2 skilled persons reviews took place, and 3 principal firms applied to have requirements imposed at the gateway.
Our FCA and Practitioner Panel survey 2024/25[3] showed that 60% of principal firms surveyed think that oversight of ARs has improved because of our actions this year. Only 1% believe oversight had decreased. This continues the trend we have seen in surveyed firms reporting this improvement across their sectors.
Our focus on improving principal firm oversight of ARs will continue, building on the progress in the last 3 years, to help raise standards across financial services.