---
title: "Fit and proper for AR staff: FIT, SUP 10A and approved persons · Merrin"
description: "How a principal assesses the fitness and propriety of an AR's people, which roles need FCA approval, and how SM&CR applies inside ARs."
url: https://merrin.ai/glossary/fit-and-proper
---

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

# Fit and proper assessments for AR staff

The principal must be satisfied that each AR and the people who run it are fit and proper: honest, competent and financially sound. Some individuals in ARs also need FCA approval. SM&CR applies to the principal; within an AR, individuals fall under the approved persons regime in SUP 10A.

## The principal's assessment

- Suitability includes the fitness, propriety and financial standing of the AR's controllers, directors, partners, proprietors and managers, assessed against FIT and the Form A questions (SUP 12.4.4G, SUP 12 Annex 2).
- Information must be verified, not just collected: accurate, detailed and up to date, with omissions and concerns discussed with the individual (SUP 12.4.4EG).
- FIT looks at honesty, integrity and reputation; competence and capability; and financial soundness (FIT 1.3.1BG). It is reassessed in each annual review (SUP 12.6A.2R(2)).

## Approved persons in ARs

- The controlled functions for ARs are the governing functions (CF1 to CF5) and the CF30 customer function (SUP 10A.4.4R). The principal makes the application.
- Where an AR's scope is only non-investment insurance distribution or credit-related activity and its main business is unregulated, such as a car dealer, only one governing function needs approval (SUP 10A.1.16R).
- The customer function does not apply to general insurance business or credit-related regulated activity, and the regime does not apply to IARs.
- AR approved persons are subject to APER. Certification can apply to AR staff, but often does not because they are not the principal's employees (SYSC 27.4.2G).

## Common misconceptions

**“SM&CR senior manager functions apply inside ARs.”**

Generally they do not. ARs have their own controlled functions in SUP 10A.

**“Every director of a credit-broking AR needs approval.”**

Where SUP 10A.1.16R applies, only one governing function holder does.

**“FCA approval means the principal's fit and proper work is done.”**

The principal must be satisfied first and keep reassessing. The FCA has also criticised principals that rely on its gateway checks to spot risk.

## In Merrin

Each individual completes their own declarations in the AR Portal, and the assessment, assessor and conclusion are recorded once a year.

[Fit & Proper](https://merrin.ai/features/fit-and-proper)

## Related terms

- [Annual AR review](https://merrin.ai/glossary/annual-review)
- [Notifying the FCA about ARs](https://merrin.ai/glossary/ar-notifications)
- [AR](https://merrin.ai/glossary/appointed-representative)

## 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 Handbook, SUP 10A](https://www.handbook.fca.org.uk/handbook/SUP/10A/)
- [FCA Handbook, FIT](https://www.handbook.fca.org.uk/handbook/FIT/)
- [FCA: Onboard, change or terminate an AR](https://www.fca.org.uk/firms/principals-appointed-representatives/onboard-change-terminate)

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