The Financial Conduct Authority issued 19 enforcement notices to principal firms operating in the fintech and digital finance sector during the fourth quarter of 2025, marking the most significant crackdown on the appointed representatives regime since enhanced oversight rules came into force in December 2023. The enforcement actions, disclosed in the FCA's quarterly enforcement data release, targeted principal firms that had failed to maintain adequate oversight of appointed representatives offering payment services, investment advice through digital platforms, and insurance distribution via fintech aggregators.

The FCA found that several principal firms had onboarded appointed representatives without conducting adequate due diligence on their financial promotions, complaint handling procedures, or operational capabilities. In three cases, appointed representatives had been permitted to operate consumer-facing services for more than six months without a single compliance visit or review from their principal. FCA enforcement director Therese Sheridan said the regulator would "hold principal firms to account for the conduct of their appointed representatives" and warned that further enforcement action was likely. "The appointed representatives regime is not a back door to operating regulated activities without proper oversight," she said.

The crackdown has reignited debate about whether the appointed representatives model remains fit for purpose in the digital age. A Treasury Select Committee inquiry last year heard evidence that the regime had been used by some fintech firms to circumvent the full authorisation process, effectively outsourcing regulatory responsibility to principal firms that lacked the resources to provide meaningful oversight. The FCA said it was considering whether additional rule changes were necessary, including a possible requirement for principal firms to obtain specific permission before onboarding appointed representatives that offer digital financial services. Trade body the Association of Professional Compliance Consultants said the enforcement wave was "long overdue" and called for a fundamental review of the regime.