The Financial Conduct Authority (FCA) has published a supervisory review of good practice and areas for improvement in principal firms’ oversight of appointed representatives (ARs) that report no regulated activity for periods of time. The FCA warns that an unexplained lack of reported regulated activity can indicate weaknesses in governance, monitoring and risk management, increasing the risk of consumers being misled and suffering harm, even where principals cannot rely on transaction oversight as a source of information. Drawing on two years of REP025 regulatory return data, the FCA assessed whether principals could explain the absence of income from regulated activities, were accurately reporting AR activity, and could evidence effective oversight of the AR’s business. The FCA expects principals operating AR networks (including introducer ARs) to reassess arrangements where ARs are not routinely carrying out regulated activities, provide clear and accurate explanations in REP025 where ARs have no regulated activity in a reporting period, and take timely action to terminate relationships that are no longer appropriate, updating the FCA when relationship status changes. The review highlights misclassification and attribution issues in REP025 (including regulated commission recorded as unregulated income or attributed to another party), generic or unclear explanations of inactivity, weak engagement with inactive ARs (including prolonged Register presence and “halo effect” risks), inadequate monitoring of consumer-facing materials (including incorrect claims such as “FCA authorised” and use of the term “Authorised Representative”), and non-compliant AR agreements that did not clearly accept responsibility for regulated activities or include required terms. Following proactive engagement, the FCA reports positive change at 7 of the 14 principal firms reviewed, including 11 ARs offboarded and strengthened monitoring arrangements. It expects principals to actively engage with ARs (including where inactive), improve data quality and governance supporting oversight, report AR revenue and inactivity reasons accurately via REP025, and monitor the appropriateness of AR relationships so the Financial Services Register remains up to date.
Financial Conduct Authority 2026-04-15
Financial Conduct Authority publishes supervisory review on inactive appointed representatives and sets expectations for principal oversight and REP025 reporting
The Financial Conduct Authority has published a supervisory review of principal firms’ oversight of appointed representatives that report no regulated activity, warning that unexplained inactivity can signal weaknesses in governance, monitoring and risk management and increase consumer harm risk. Drawing on two years of REP025 data, the review highlights misreporting and misclassification of AR income, unclear explanations of inactivity, weak engagement with inactive ARs, inadequate monitoring of consumer-facing materials and non-compliant AR agreements. The authority expects principals to reassess inactive AR arrangements, improve data quality and oversight, and ensure timely offboarding and Register updates where relationships are no longer appropriate.