---
title: "The SUP 12 annual self-assessment for principal firms · Merrin"
description: "Every year a principal's governing body must approve a self-assessment of how the firm meets SUP 12. What it must cover, and what the FCA found."
url: https://merrin.ai/glossary/annual-self-assessment
---

[Glossary](https://merrin.ai/glossary)

# Annual self-assessment

Once a year the principal's governing body must review and approve a written self-assessment setting out how the firm complies with SUP 12, naming any material deficiencies and agreeing what will be done about them. It is a single document covering all the firm's AR relationships, IARs included (SUP 12.6A.6R).

## The rule

- Reviewed and approved by the governing body at least every 12 months, recording how the firm complies and identifying material deficiencies and the steps to address them (SUP 12.6A.6R(1)).
- It must include concerns arising from the latest annual and triggered reviews of each AR (SUP 12.6A.6R(2)).
- It should cover the effectiveness of oversight, the adequacy of controls and resources, the risk of harm and the methods used to verify compliance (SUP 12.6A.7G).
- Each approved version is kept for at least six years (SUP 12.6A.8R). Escalation does not wait for the annual sign-off (SUP 12.6A.10G).

## What the FCA found

- In its September 2024 review the FCA found that 83% of the principals it assessed in depth had completed a self-assessment, but only 52% were of good quality.
- Weak examples were tick-box templates missing required points, with no list of deficiencies, no action plan and no evidence of governing body sign-off.

## Common misconceptions

**“It is a document per AR.”**

It is one firm-level document. The per-AR work is the annual review.

**“Compliance can sign it off.”**

It must be approved by the governing body.

## In Merrin

In Merrin the self-assessment is a review with the organisation as its subject, built from the year's AR reviews and issues and signed off by the board.

[Reviews & approvals](https://merrin.ai/features/reviews)

## Related terms

- [Annual AR review](https://merrin.ai/glossary/annual-review)
- [Triggered review](https://merrin.ai/glossary/triggered-review)
- [Principal firm](https://merrin.ai/glossary/principal-firm)

## Sources

Checked against these sources on 23 October 2026. This is general information, not legal advice.

- [FCA Handbook, SUP 12](https://www.handbook.fca.org.uk/handbook/SUP/12/)
- [FCA: Principal firms embedding new rules for effective AR oversight (September 2024)](https://www.fca.org.uk/publications/good-and-poor-practice/principal-firms-embedding-new-rules-effective-appointed-representative-oversight)
- [FCA: Principals' responsibilities and how to oversee ARs](https://www.fca.org.uk/firms/principals-appointed-representatives/responsibilities-how-to-oversee)

## See what your team could stop doing by hand

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