What does "principal firm" and "appointed representative" mean? How do I know whether I am a principal or an appointed representative?

In broad terms, an appointed representative is a business which is not authorised, but which has a contract with a firm (called 'the principal') that allows it to carry on certain activities under the permission of the principal.

A business cannot be an appointed representative for a regulated activity if:

  • it does not have a contract with a principal firm which allows or requires it to carry on business
  • its principal firm has not accepted responsibility in writing for the regulated activity the business undertakes in
  • the firm that the business wants to act as its principal only holds an interim permission for the relevant credit activity
  • it operates a credit reference agency
  • it provides credit (unless the credit is free of interest and any other charges)
  • it is authorised for another activity. 

However, the exceptions to this are:

  • A firm with an interim permission for a credit activity may also be an appointed representative for a FSMA regulated activity that is not covered by its interim permission
  • A firm with a limited permission for certain credit activities will be able to be an appointed representative for other regulated activities. e.g. a motor dealer with a limited permission to carry on credit broking can also be an appointed representative insurance intermediary.

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