Introduction
The UK financial services industry offers innovative firms a number of pathways to operate compliantly without direct authorisation from the Financial Conduct Authority (FCA). Among these is the Appointed Representative (AR) regime, originally introduced for insurance distributors and independent financial advisors (IFAs) in the Retail Sector under the Financial Services and Markets Act 2000 (FSMA). Over time, this regime has evolved into the backbone of several operational models that support financial innovation and market entry.
Three core models are now widely recognised in the wholesale institutional space:
This paper defines and compares each, tracing their origins to Seonaid Mackenzie, founder of Sturgeon Ventures, who pioneered the use of the AR regime in wholesale finance beginning in 2005 – from 2001 to 2005 Seonaid incubated people from a regulatory point of view within Sturgeon Ventures regulated permissions and coining the phrase Regulatory Incubation creating a framework that has since shaped a multi-billion-pound industry.
Historical Origins
The Pioneer: Seonaid Mackenzie and Sturgeon Ventures
- 1998: Seonaid Mackenzie establishes the Sturgeon Ventures brand, working with a U.S. Single Family Office, following a successful 15-year career as a stockbroker, venture capital investment committee member, and corporate finance advisor.
- 2001: Seonaid coins the term “Regulatory Incubator“, launching a new model to help financial ventures operate compliantly while building toward FCA authorisation, December 2001 was the first Approved Person in the UK.
- 2004: While advising on an M&A transaction involving two insurance firms, she identifies the Appointed Representative regime as a tool that could extend well beyond insurance – into third party marketing, corporate finance, venture capital, and financial advisory in the wholesale industry.
- 2005: Sturgeon Ventures becomes the first firm to convert incubated ventures into Appointed Representatives (ARs) in the wholesale financial services space.
- 2007: Seonaid describes this pioneering model to Joe Vittoria,
- 2008: Sturgeon Ventures LLP incorporates (previous to this Sturgeon Ventures was a trading name and Seonaid Mackenzie was a sole trader) with Appointed Representative Firms under her nurture. Previous to this she partnered Asset Managers for the asset management or advised self-managed funds in locations like Malta and/or the Cayman.
- 2010: Joe Vittoria coins the term “Regulatory Hosting“, helping to drive widespread adoption of the AR model — with both Sturgeon and Vittoria spearheading growth in the emerging industry.
Sector Focus: Today’s Divergence in Specialisation
- Sturgeon Ventures, while once active in hedge fund incubation, began winding down hedge fund activities in 2022 to focus on:
- MiFID investment firms (long-only strategies)
- Managed accounts
- Private equity and venture capital advisory
- Corporate finance and capital raising
- Family office advisory
- Third-party marketing
- Joe Vittoria continues to lead in the hedge fund regulatory hosting space, particularly within alternative asset management.
Together, they represent the two key branches of the regulatory hosting/incubation ecosystem in the UK: one focused on institutional long-term capital and advisory, the other on alternative investment strategies.
Model Definitions and Comparison
| Feature | Regulatory Incubation | Regulatory Hosting | Regulatory Umbrella |
| Originator | Coined by Seonaid Mackenzie (2001) | Term coined by Joe Vittoria (2010) after learning of the model in 2007 | Industry-wide structural/legal term |
| Uses AR Regime? |  Yes | Yes | Yes |
| Purpose | To develop firms toward FCA authorisation | To provide long-term compliant operation under a principal firm | To legally structure AR activity under FCA supervision |
| Duration | Transitional – leading to direct authorisation or Indefinite | Indefinite – firms may remain ARs permanently | Flexible – determined by the business arrangement |
| Support Provided | High – strategic mentoring, business model development | Moderate – compliance infrastructure, risk oversight | Minimal – legal permissions only |
 | |||
| End Goal | Graduation to direct FCA authorisation | Continued operation under a Principal | Varies |
| Branding | Own brand under regulatory supervision, often as a trading name | Own brand or co-branded | Varies |
| Typical Clients | Startups, VC-backed firms, family offices, boutique managers, overseas persons moving to UK | Hedge funds, brokers, fintech firms | Any AR under a Principal |
| Business Culture | Entrepreneurial, collaborative, compliance embedded | Commercial, compliance-focused | Legal/structural |
Understanding the Distinctions
Regulatory Incubation
A model pioneered by Seonaid Mackenzie in 2001 to nurture financial services ventures, helping them grow under supervision and transition to direct FCA authorisation. This approach combines regulatory oversight with business strategy, often including support in operations, branding, investor relations, and compliance systems.
ARs in incubation are intended to graduate to full authorisation, albeit with Sturgeon Ventures many have stayed for more than a decade.
Regulatory Hosting
Coined by Joe Vittoria in 2010 — after learning about the model from Seonaid Mackenzie in 2007 — Regulatory Hosting offers a compliance service enabling firms to operate permanently under an authorised firm’s permissions. This model is particularly popular among hedge fund platforms and fintechs.
It provides a commercial, scalable solution without the developmental support of incubation.
Regulatory Umbrella
A legal framework rather than a business model. The term “regulatory umbrella” refers to the permissions and supervision extended by a Principal firm to its ARs. It defines the scope and boundaries of what ARs can do — but does not inherently imply incubation or long-term hosting.
Think of this as the infrastructure, not the service model.
Why the Distinction Matters
Understanding these models is essential for:
- Entrepreneurs and Founders: Choosing the right path to market and regulatory readiness.
- Investors: Assessing operational maturity and regulatory risk.
- Service Providers: Offering tailored support aligned with business intent.
- Regulators: Maintaining oversight over the growing AR ecosystem and ensuring robust principal-AR relationships.
A Final Note on Origin and Industry Leadership
It is essential to recognise that Regulatory Incubation and the application of the AR regime to wholesale financial services were created by Seonaid Mackenzie in the early 2000s. This innovation predated and ultimately inspired the Regulatory Hosting terminology that became widely adopted later, albeit the framework is the same.
Today, both Sturgeon Ventures and Joe Vittoria’s platform represent different specialisations within a model that has transformed UK financial services.
Contact Us
To explore how Sturgeon Ventures — the original Regulatory Incubator — can support your venture in asset management, private markets, advisory, or family office services, or an overseas firm looking to establish in the United Kingdom, please get in touch.
Vittoria & Partners
Note: if you have a new venture involving managing a Hedge Fund or trading from the UK please contact:
Sturgeon Ventures LLP believes in no competitors only trusted partners, where your venture does not fit our risk tolerances, we will introduce you to trusted partners, as the pioneer of the wholesale appointed representative sector we keep in touch with what our trusted partners risk tolerances are.
