Recruitment for Principal Firms and Appointed Representatives

Who This Service Is For

An appointed representative is a firm that carries on regulated activities under the authorisation of a principal, which takes regulatory responsibility for what the AR does. The principal has to oversee its ARs to a standard comparable with its own business. If you want the mechanics of the regime and the case for going directly authorised, our guide to appointed representatives explained covers it. This page is about the hiring that sits behind the model.

We typically work with:

• Networks in mortgages, protection, general insurance and financial advice.
• Regulatory hosts that appoint ARs in investment management, corporate finance and other wholesale activities.
• Insurers, MGAs and brokers that use ARs to distribute products.
• Investment and wealth principals with advisers or boutique firms operating as ARs.
• Appointed representatives preparing to leave their principal and apply for their own permissions.

Why Principal Firms Are Hiring

The FCA’s changes to the AR regime, set out in PS22/11, took effect on 8 December 2022. They did not change the basic principle that a principal is responsible for its ARs, but they made the oversight expected of principals more explicit and more visible to the regulator. In summary, principals must:

• notify the FCA of a new AR appointment 30 calendar days before it takes effect, with more information about the AR’s business than before;
• assess and monitor the risk each AR poses to consumers and markets, with adequate systems, controls and resources for that oversight;
• review information on their ARs’ activities, business and senior management at least annually;
• prepare an annual self-assessment of how they meet their responsibilities across the AR network, reviewed and signed off by the principal’s governing body;
• be clear on when to terminate an AR relationship and how to manage an orderly exit; and
• report complaints and revenue information for each AR to the FCA every year.

The FCA’s page on how to oversee your appointed representatives sets out what it expects, and the detailed rules sit in SUP 12 of the FCA Handbook. The FCA said at the time that the rules do not change the fact that principals are responsible for their ARs, and principals remain an area of supervisory attention. The practical result is that AR oversight has moved from a back-office task to something the board has to evidence, and many principals have found they need more people, or more experienced people, to do it.

The Roles We Recruit for Principal Firms

The right structure depends on the size of the AR network, the products involved and how much risk sits in each AR. These are the roles we are most often asked to fill.

Who Owns AR Oversight at Senior Manager Level

The regime does not apply the SMCR to ARs themselves, but at the principal the FCA expects clear accountability for AR oversight and sign-off by the governing body. Most principals allocate responsibility for AR oversight to a named Senior Manager, commonly the SMF16 compliance officer or an executive director, and record it in their responsibilities documentation. Whoever holds it needs enough time and support to make it real. We recruit for compliance officers (SMF16), MLROs (SMF17) and combined SMF16/SMF17 appointments at principals, and for the financial crime leadership beneath them.

Options for Smaller Principals

Not every principal needs a full in-house team. A smaller principal with a modest AR network can often combine models:

• In-house: a permanent compliance officer or AR compliance manager who knows the business and its ARs well.
• Fractional or part-time: an experienced person for a set number of days a week, often as SMF16 or SMF17. See our fractional and interim SMF cover and part-time compliance officer pages.
• Interim: a short-term appointment to cover a gap or lead a project, through our interim MLRO and compliance officer recruitment.
• Outsourced monitoring support: file reviews or thematic work bought in, while the principal keeps responsibility and a named person in-house to oversee it. Our page on what you can and can’t outsource explains the limits, and our outsourced compliance officer page covers that model.

Whatever mix you choose, the principal cannot outsource its responsibility for its ARs.

Appointed Representatives Going Directly Authorised

An AR leaving its principal to apply for its own permissions moves from being overseen to doing the overseeing. The first question is which Senior Managers the firm will need, and that depends on its SMCR tier. A Core firm typically needs a chief executive (SMF1) or executive directors (SMF3), a chair (SMF9) if it has one, a compliance officer (SMF16) and, if it is within the Money Laundering Regulations, an MLRO (SMF17). A Limited Scope firm uses the SMF29 Limited Scope Function, plus SMF16 and SMF17 only where they are required. Our guide to which SMFs apply at which firm tier sets this out.

Timing matters. The FCA will want to see the people who will run the firm, so named candidates and their Form A applications usually need to be ready when the application goes in, not after. Many ARs going direct use a fractional SMF16 for the first year and build from there. See:

• Going directly authorised: the Senior Managers you’ll need
• Becoming a directly authorised insurance broker
• Leaving a network: a 12-month plan for insurance brokers

Our SMF authorisation support helps candidates and firms prepare for the approval stage.

What to Look for in an AR Oversight Candidate

A good general compliance officer is not automatically a good AR oversight lead. The job asks for a particular mix of technical skill and judgement:

• Knowledge of your AR model: a mortgage and protection network, a wholesale regulatory host and an insurance distribution chain carry very different risks. Candidates should understand the products and how your ARs make money.
• File review skill: the ability to review advice or sales files quickly and accurately, spot patterns and grade outcomes consistently.
• Onboarding and due diligence judgement: knowing when a prospective AR is a good fit, which questions to ask about controllers and track record, and when to say no.
• Willingness to challenge: the confidence to restrict or exit an AR that generates good revenue but poor outcomes, and to explain why to the commercial team.
• MI and board reporting: turning monitoring results, complaints and revenue data into clear reporting the governing body can use for its annual sign-off.

Interview Questions That Separate Strong Candidates

• How would you risk rate an AR network of our size, and how would the rating change the monitoring each AR receives?
• Talk me through the due diligence you would want before we notify the FCA of a new AR.
• One of our highest-earning ARs has repeated file review failures. What do you do, and what do you tell the board?
• What would you put in our annual self-assessment, and how would you evidence it?
• What do our complaints and revenue figures by AR tell you, and what would make you look closer?
• How would you plan an orderly exit for an AR we decide to terminate?

Strong answers are specific to your model and show the candidate has made, and defended, difficult decisions about ARs before. Our wider guide to interviewing an SMF candidate covers the Senior Manager side of the interview.

How We Run These Searches

1. Brief. We start with your AR model: the number and type of ARs, the products, how oversight works today and where the gaps are.
2. Shortlist. We approach candidates who have worked in comparable principal firms, test their file review and oversight experience, and present a shortlist with a clear view on each person’s strengths and gaps.
3. Approval support. For Senior Manager roles, we help you and the candidate prepare for the Form A process, including fitness and propriety checks and the statement of responsibilities.

The work is done by our specialist team, and every SMF Capital search is overseen by Adrian Lawrence FCA. If your principal sits within the insurance market, our insurance SMF recruitment page covers the wider Senior Manager roles we fill there, and our compliance officer for insurance brokers page covers broker-specific hiring.

Frequently Asked Questions

Do principal firms need a dedicated AR oversight manager?

Not always. The rules require adequate systems, controls and resources for AR oversight, not a particular job title. A principal with a few low-risk ARs may manage with its compliance officer and some monitoring support. A larger or fast-growing network usually needs someone whose main job is AR oversight.

Can the compliance officer also oversee the ARs?

Yes, and at smaller principals this is common. The test is whether they have the time and support to do both properly, and whether the board can see the evidence. If the annual review or self-assessment is slipping, that is usually the sign to add capacity.

Do you recruit for networks?

Yes. We recruit compliance, monitoring, financial crime and Senior Manager roles for networks in mortgages, protection, general insurance and advice, as well as for regulatory hosts and insurance principals.

What does an AR need before going directly authorised?

Among other things, it needs the right Senior Managers identified for its SMCR tier, ready to be named in the application, along with its own compliance arrangements and monitoring. Our guide to the Senior Managers you’ll need covers the roles.

Can you provide interim cover during a skilled person review?

Yes. We place interim AR oversight leads and compliance officers to support principals through section 166 reviews, remediation programmes and AR terminations.