--- title: "AR oversight for regulatory hosts and investment principals · Merrin" description: "For regulatory hosts and investment principals: the 60-day notice, what investment ARs cannot do, host AIFMs, financial crime and the FCA's 2024 to 2026 findings." url: https://merrin.ai/industries/investments --- [Industries](https://merrin.ai/industries) Investment & regulatory hosting # Host ARs with oversight you can show For regulatory hosts, host AIFMs and investment principals whose ARs are advisers, arrangers and sponsors working under their permissions. [Schedule a demo ](https://merrin.ai/demo) _(Illustrative reviews workflow with fictional firm data)_ ## The model the 2022 rules were written for The FCA's case for tightening the regime rested on harm at principals, and hosting was a central concern: limited resource, little knowledge of the markets ARs work in, and reliance on AR fees. **investment management ARs in March 2026** 1,055 **regulated revenue through those ARs in 2025** £1.9bn **of FSCS claims by value came from principals and ARs, 2018 to mid-2019** 61% ## The rules that matter in this sector **Sixty days' notice to host** A firm must tell the FCA at least 60 days before it starts offering hosting services, on top of the 30-day notice for each AR (SUP 12.7.9AR). **What an investment AR cannot do** An AR can arrange and advise, but cannot manage investments, act as an AIFM or deal as principal. In the host AIFM model, portfolio management is done by AR staff seconded into the AIFM (SUP 12.2.7). **One principal for retail business** An AR doing designated investment business with retail clients may have only one principal for it, and a tied agent may act for only one MiFID firm (SUP 12.5.6AR). **Approving your ARs' promotions** The financial promotions gateway does not apply to a firm approving its own ARs' promotions for the activities it has accepted, but the principal stays responsible for them. **Capital and conflicts** Principals should reflect the risks their ARs pose in their capital and liquidity, and manage the conflicts that come from depending on AR fees (SYSC 10). ## What the FCA has said recently 1. 21 April 2026 ### FCA review of inactive ARs Using two years of REP025 data it found misreported revenue, blanket “not trading” explanations, an AR website claiming to be “FCA authorised”, and suspensions with no documented reason or FCA notification. 2. 12 February 2026 ### HM Treasury consults on the AR regime Proposals include an FCA permission to act as a principal, Ombudsman jurisdiction over ARs and bringing ARs into SM&CR. No response had been published by October 2026. 3. 20 October 2025 ### Financial crime survey of corporate finance firms 29% of principals had not carried out financial crime risk assessments for their ARs. 4. 6 September 2024 ### FCA review of principals embedding the 2022 rules Only 52% of the self-assessments and 43% of the annual reviews it examined were of good quality, and fewer than a third of principals checked ARs' consumer-facing materials. 5. 25 March 2024 ### Host AIFM findings Weak oversight of secondees, little AIFM involvement in investor due diligence, capital that ignored the number of ARs, and ARs holding themselves out as the manager. ## Between annual reviews **An AR works outside its scope** Each firm's permitted activities are on its record, and activity outside them is an issue type of its own. [Monitoring & issues](https://merrin.ai/features/monitoring) **Growth outruns your resources** Risk scores combine each firm's size, complaints and findings, so you can see where the network is growing and where the risk sits. [Risk & completeness](https://merrin.ai/features/risk) **The self-assessment needs evidence** Each AR's annual and triggered reviews are recorded over a frozen snapshot, ready to feed the governing body's sign-off. [Reviews & approvals](https://merrin.ai/features/reviews) ## What to collect from each AR Merrin schedules these as returns, by risk tier, and puts each one with the firm or Individual who needs to provide it. [Returns & tasks](https://merrin.ai/features/returns) - Revenue split into regulated, non-regulated financial and non-financial - Complaints for REP025 - Deals arranged, mandates and funds advised, to test against scope - Client categorisation, with retail clients flagged - Financial promotions for approval, and a register of websites and social accounts - The AR’s financial crime risk assessment and investor due diligence files - For host AIFMs: the secondee register and the funds each AR works on - Declared conflicts, and the business plan and target market - Fit and proper declarations, solvency and financial statements ## Where Merrin fits Merrin gives a host one record per AR: its scope, people, returns, risk, issues and reviews, so the governing body’s self-assessment rests on evidence rather than attestations. ### Keep your existing systems Portfolio management, fund administration, dealing and investor onboarding stay with your existing systems. Merrin does not hold client money or assets. Promotion reviews and financial crime modules are planned work. Investment-specific returns need to be confirmed before rollout. [See the roadmap](https://merrin.ai/changelog) Consumer credit is our initial focus. Talk to us about the fit for a hosting business. ## Questions from investment & regulatory hosting principals - What counts as a regulatory host? A firm that offers, for remuneration with a view to profit, a service through which unauthorised firms become its ARs, where it either carries on no regulated activity except through its ARs or its ARs' activities are unconnected to its own. It must tell the FCA at least 60 days before it starts (SUP 12.7.9AR). - Can our AR manage a fund or a client portfolio? No. Managing investments and managing an AIF are not activities an AR can be exempt for. In the host AIFM model, portfolio management is done by the AR's staff seconded into the authorised AIFM, which the FCA expects to supervise them and to stop the AR holding itself out as the manager. - What must our annual self-assessment contain, and who signs it? The governing body must review and approve it at least every 12 months (SUP 12.6A.6R). It records how the firm complies with SUP 12, the material deficiencies and the steps agreed to fix them, and concerns from the latest AR reviews. It is kept for six years. - Do we need gateway permission to approve our ARs’ promotions? No. The gateway that took effect on 7 February 2024 does not affect a firm approving its ARs' promotions for the activities it has accepted responsibility for. The principal is still responsible for them being compliant. - Is the AR regime about to change? HM Treasury consulted in February 2026 on requiring FCA permission to act as a principal (existing principals would be treated as holding it), giving the Financial Ombudsman jurisdiction over ARs where the principal is not responsible, and bringing ARs into SM&CR. The consultation closed on 9 April 2026\. As of October 2026 the government is analysing the feedback and no response or timetable has been published. ## Sources Checked against these sources on 23 October 2026. This is general information, not legal advice. - [FCA: Appointed representatives data (June 2026)](https://www.fca.org.uk/data/appointed-representatives-data) - [FCA: Regulatory hosting services](https://www.fca.org.uk/firms/principals-appointed-representatives/regulatory-hosting-services) - [FCA: Alternative investment fund manager hosting](https://www.fca.org.uk/firms/principals-appointed-representatives/alternative-investment-fund-manager-hosting) - [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: Managing potential risks of inactive appointed representatives (April 2026)](https://www.fca.org.uk/publications/good-and-poor-practice/managing-potential-risks-inactive-appointed-representatives) - [FCA: Gaps in financial crime oversight at corporate finance firms (October 2025)](https://www.fca.org.uk/news/press-releases/gaps-financial-crime-oversight-corporate-finance-firms) - [FCA: PS22/11 Improving the Appointed Representatives regime](https://www.fca.org.uk/publications/policy-statements/ps22-11-improving-appointed-representatives-regime) - [HM Treasury: Consultation on the Appointed Representatives regime (February 2026)](https://www.gov.uk/government/consultations/consultation-the-appointed-representatives-regime) ## Built for AR networks Choose your sector to see where Merrin helps with AR oversight. [Consumer creditMotor dealers and retailers. Our initial focus](https://merrin.ai/industries/consumer-credit)[Credit broking & lendingBroker and introducer networks](https://merrin.ai/industries/credit-broking)[Mortgages & protectionMortgage networks and their brokers](https://merrin.ai/industries/mortgages)[Financial adviceAdvice networks and wealth firms](https://merrin.ai/industries/financial-advice)[General insuranceInsurers and brokers with AR outlets](https://merrin.ai/industries/general-insurance)[Investment & regulatory hostingHosts, host AIFMs and investment principals](https://merrin.ai/industries/investments) ## See what your team could stop doing by hand Walk through onboarding, monitoring and reviews with your own oversight process in mind. [Schedule a demo ](https://merrin.ai/demo)