The Treasury is to consult on plans to introduce a tougher regulatory regime for 34,000 appointed reps.
The Treasury last year outlined concerns about poor behaviour among some appointed rep (AR) firms and said it would act if necessary.
It will now consult on introducing a tougher regulatory regime.
The Treasury says there are about 34,000 appointed representatives working for about 2,400 firms. They provide financial advice under a supervising regime from their host company but operate independently.
The Treasury defines ARs as, "a firm or person who carries on a regulated activity or activities under the responsibility of an authorised financial services firm."
The Treasury said in a statement yesterday: “As explained in the policy statement published in August 2025, there is concern that poor oversight of some Appointed Representatives is putting some consumers at risk. The government intends to address this concern so consumers and businesses can have confidence in the regime and so that the benefits provided by Appointed Representatives can continue well into the future.
“In line with the commitment made in the August policy statement, this consultation seeks views on the changes the government proposes to make to the legislative framework for Appointed Representatives.”
Among the reforms plannd are:
• Requiring principal firms which authorise appointed reps to take more responsibility for supervising firms
• Extending the Financial Ombudsman Service’s remit more widely to AR firms to provide better consumer protection
• Bringing ARs within scope of the Senior Managers and Certification Regime (SMCR) to ensure better regulation
The Treasury says that the proposed changes should provide targeted reforms to the legislative framework and help prevent “misconduct” involving ARs. Authorised firms wishing to use ARs will need to first obtain permission from the Financial Conduct Authority (FCA).
Ash Daniells, legal director at law firm Kennedys welcomed the proposals. He said: “Bringing appointed representatives into the scope of FOS investigations is a significant shift that recognises the crucial role ARs play in the financial sector.
"The move strengthens accountability and reinforces the growing view that responsibility for consumer protection cannot sit solely at principal firm level. It closes a gap in accountability and reflects the reality that customer harm often arises at AR level, not just at principal firm level. ARs will need to ensure they have appropriate insurance in place, given the potential that redress may now be directed to them.”
The consultation runs until 9 April.
• Details of the proposals are here: Treasury AR proposals.
Financial Planning Today Analysis: Many would argue that these proposals are long overdue. Most ARs provide good advice and good service to clients but a significant number do not and many of the worst cases of regularly misconduct in recent years have occurred at AR firms and among AR reps who, for too long, have been allowed to work under a lighter regime than many directly authorised firms. The Treasury is keen to go ahead with its proposals so significant change is likely with this shake up and many ARs may need to reconsider their regulatory requirements.