Go it Alone or join a Mortgage Networkshootermk
Considering the differences between submitting business as an appointed representative as compared to being directly authorised.
Direct Authorisation is it the only way?
As far as Directly Authorised advisors are concerned along with the tribulations suffered by appointed representative advisors, they have also born the brunt of increased vigilance and policing from the FCA. Whereas in previous years at least smaller DA businesses had the comfort of knowing that it was unlikely that the FCA could spare the resources to bother much with them, thanks to increases in staff numbers and intelligent software which can now apply more than 130 different checks on returns this is no longer the case. With the FCA also increasing their fees and the multitude of changes to regulation such as RDR, MMR and MCD making compliance increasingly complex, the network route can become more attractive to directly authorised brokers as a way of both controlling costs and increasing confidence in their compliance regime.
There is a widely held misconception amongst some Directly Authorised brokers that joining a mortgage network as an Appointed Representative will constrict your business but this is only true if you join the wrong mortgage network!
In fact if you join the right network with marketing support and a full range of ancillary services such as will writing to add to your current product range, most people will find that the opposite is true.
Additionally, all the best networks now offer a full CRM system to track your commissions, take care of compliance documentation, write your reasons why letters, flag up when a client’s existing mortgage deal comes to an end and let you know when it’s time to revisit them so you can offer your annual free review of their current portfolio of insurances to see if you can save them money.
Obviously these are all areas where a good network can help you to boost your income.
Compliance is not only getting more complicated, with the FCA now offering 50 shades of grey for many rulings. Did anyone fully understand RDR, MMR or MCD? All of this leading to a situation where even to most compliant of mortgage advisers now have an increasing struggle to keep up to date with continuing change in the regulatory framework. Looking back to the time mortgage regulation came into force “M Day”, it was estimated that the average mortgage advisor would need to spend 20% of their time on compliance issues. Even if demands were no worse since then and I suspect the truth is they’ve more than doubled that still means that as a DA broker you effectively, be spending one day a week doing nothing but compliance. Wouldn’t that time be better spent advising clients, and making money?
These are just some of the reasons that many Directly Authorised advisors consider becoming an Appointed Representative, and allow us to help them find the right home for their business.
Don’t delay if your current network is bought out
If you are currently an appointed representative of a mortgage network which is in financial trouble or up for sale, this may well make the decision unavoidable since the very last thing you want is to realise that you should have moved when the problems first started but now your network has gone into liquidation with your pipeline business, or has been sold to another more aggressive company who are insisting that in order to be paid your pipeline you sign a new contract with them.
Other reasons we often come across for changing financial networks include seeking a better compliance regime, increased commission and proc fees, marketing support or an increased panel of lenders/insurers. In fact the number one reason we come across.
The good news is that the more proactive mortgage networks have already been looking to the future and planning the development of both their own and their Appointed Representatives businesses post-recession. They have streamlined their organisations, to enable them to operate on smaller margins, putting more money into their AR,s pockets, while at the same time increasing their support functions in order to help AR,s take full advantage of the upswing now that it has arrived.
As a successful mortgage broker in an emerging market, your business is vital to networks, although service standards in some cases undoubtedly fell as businesses struggled to cope with the onset of the recession, often having to make hurried strategic decisions. The storm has now passed and standards of support have improved across the board, in the better networks back to pre-recession levels.
Really look at your current Mortgage Network,
Did they help you to grow your business or even just to survive through the bad patch?
Do they offer consistently good commission and proc fees, fee levels aren’t nearly the only deciding factor in network choice, but if you are consistently being paid less than the industry norm, then this puts you at a real disadvantage?
Do they offer a full range of products, conveyancing introducer schemes, equity release, will writing affiliates, secured loan facilities? You might not need or even want all of these facilities, but even as business picks up, another income stream never hurts.
Basically if your current mortgage network can’t provide the service standards or financial rewards you need, then you need to change.