Appointed representative vs direct FCA authorisation

The two routes, in a sentence each

Direct authorisation means you hold your own permission on the FCA register and answer to the FCA yourself. Appointed representative (AR) status means you operate under the authorisation of another firm — your "principal" — who takes regulatory responsibility for you. Both let you offer finance legally; they just distribute cost, control and responsibility very differently.

How appointed representative status works

You enter into a written agreement with an authorised firm — often a finance provider or a compliance network — that agrees to act as your principal. The principal accepts responsibility to the FCA for the regulated activities you carry out under the agreement, oversees and monitors you, and is the firm the FCA deals with. You appear on the FCA register under that principal rather than in your own right.

There's a lighter sub-type, the introducer appointed representative (IAR), which is limited to passing on certain financial promotions and introducing customers to the principal — useful for businesses that only want to make simple introductions. One important limitation to flag: the IAR route is generally not available to firms that sell in customers' homes (see below).

How direct authorisation works

You apply to the FCA yourself through its online portal, Connect, obtain your own permission, and appear on the Financial Services Register in your own right. You then carry your own compliance obligations — the FCA's consumer credit rules ("CONC"), the financial promotions rules, the Consumer Duty and so on. For most businesses that sell goods or services and offer finance on the side, the permission needed is limited permission, which is lighter and cheaper than full permission. Our step-by-step guide to getting authorised covers the process.

The trade-offs, head to head

The two routes pull in different directions on five things that matter:

• Control and lender choice. As an AR you're usually tied to your principal's panel of lenders and their products. With direct authorisation you choose which lenders to work with.
• Cost. AR status is typically low upfront but you pay the principal an ongoing fee or a share of commission. Direct authorisation has an upfront cost — the FCA's application fee (currently around £550 for limited permission) plus preparing the application — then a small annual fee, but no network fee.
• Responsibility. Under an AR arrangement the principal carries much of the compliance burden and answers to the FCA. With direct authorisation you own your compliance.
• Independence and security. A principal can set conditions on you or end the arrangement, so your ability to offer finance depends on them. Direct authorisation makes you self-standing.
• Speed. Becoming an AR can be quicker to get going; direct authorisation takes an application that the FCA can take up to six months to decide (often faster when complete).

The in-home selling caveat

If your business sells in customers' homes — kitchens, windows, conservatories, solar and the like — you're likely a "domestic premises supplier," and the lightest IAR route generally isn't available to you. In practice that usually leaves two realistic options: full AR status under a principal, or your own direct authorisation. Our guide for home-improvement firms explains this in more detail.

A note on how the AR regime has changed

The FCA has tightened its oversight of the appointed representative model, expecting principals to monitor their ARs more closely and take clearer responsibility for them. One practical consequence is that some principals have become more selective about who they take on and how closely they supervise them. It's one reason a growing number of firms weigh up holding their own authorisation rather than relying on someone else's.

Which is right for you?

There's no universally correct answer. AR or IAR status can suit a very small or brand-new business that wants minimal regulatory involvement and is content working within one principal's panel. Direct limited permission tends to suit businesses that want independence: their own authorisation, freedom to work with any lender, no ongoing network fee, and full control of their finance proposition. It's also worth knowing that many firms start as an AR and move to direct authorisation as they grow — the FCA itself suggests an AR should consider becoming directly authorised as its size or income increases. If you'd rather own your authorisation than rent it, direct limited permission is the route — and it's more achievable than most business owners expect.