He said: “The FCA has clearly identified issues within the AR model which are not working well for consumers.

“Given the relative size of the AR universe, we believe that a data-led approach is the right one provided that it is proportionate.

“As we have set out previously to the FCA, larger principals, which are directly authorised already have developed oversight models of their ARs and we hope that while these proposed changes may lead to some tweaks to their model, it will not represent a huge overhaul.”

He added that the challenge for the FCA is in how it uses any additional data collected during its supervision and enforcement activities.

Harrington said: “It is clear from the data provided that significant harm does enter the market through elements of the AR regime.

“The regulator already collects a substantial amount of data at great financial and resource cost to the industry and we have little evidence of what it does with it.

“These additional requirements placed on firms who are already more than fulfilling their obligations with regards to being principals will only be worthwhile if the bad actors in the market either reform or leave.”