What Are Mortgage Networks Looking For in an Appointed Representative?gary
Recently I’ve had a number of conversations with brokers who were wondering if they would be accepted by a network, so I thought it might be worth a few words to explain what we at Which Network think most networks are looking for in an AR, what constitutes an almost certain No and what the alternatives are if you can’t join at this time.
If we first look at the perfect AR from a networks point of view, you will be earning in excess of £100,000 per annum with safe business products. You won’t be too bothered about percentages or charges, preferring to judge the network by the “special” relationship you know, you have with them and the wonderfully funny, knowledgeable and amicable staff they have. But tearing ourselves away from fantasy which will have at least a few network MD’s salivating at the very thought of it, the reality is we’re in yet another recession, everyone knows it and a lot of good networks will accept quite a bit less than this utopian dream broker.
In terms of income most networks are looking for over £30k per annum at start-up and around £40k plus ongoing. Of course, this is a massive generalisation, and some networks will welcome you with a little less as long as they perceive your business levels to be heading in the right direction, just as some of the big investment and pension networks now don’t really want to know any business doing less the £75k pa, horses for courses as they say.
A bad credit history is always a possible problem but isn’t always the game stopper which some people think it is. It’s 2021, with most people’s number one priority being staying alive and although house prices and mortgage levels are still exceptionally high, it’s a wild optimist who thinks this situation will carry on indefinitely. If you have had credit problems caused by a rapid fall off in business and these problems have been addressed sensibly whether this was a CCJ, default or bankruptcy, depending on your personal circumstances, it is still quite possible to be taken on as an AR. The key facts are how the debt was incurred; if it’s classed as frivolous for example then you’ve got problems, how you addressed the problem bankruptcy in itself isn’t necessarily the end of the road as long as it was in the past, caused through circumstances beyond your influence and has been satisfied for a year or so and CCJ’s, defaults or IVA’s again can often be considered depending on the amounts, causes and how they have been handled.
At the present time, unfortunately panel removals are almost always terminal. This is an increasing problem and with lenders now sharing this type of information it is likely to get worse before it gets better.
None disclosure of relevant details is another issue which is often a sure killer, so whatever you do don’t think “maybe nobody will notice”, since there are references and checks built into all application procedures and I’ve seen some great businesses run by people who I would trust with my life, refused by a network because they hadn’t disclosed some relevant information, whether it was important or not. The obvious train of thought by a compliance department in this scenario being, “if they haven’t told us about this then what else are they hiding”, just don’t do it!
So what if the computer says no? Don’t panic, there are usually other ways to submit business and courses of action you can take to turn the tables at a future date. Firstly, looking at the immediate problem of writing business, one route we sometimes recommend is to join a Directly Authorised (DA) mortgage broker or IFA. The reason I say DA here rather than AR is that a DA firm generally has more flexibility to accept an adviser into the firm as a Registered Individual. This is at least partly because within a small firm the principle or designated compliance officer will have far less people to look after and will be able to keep a much better eye on you to help you out if you are having problems. The other factor being that in a small firm, your “worth” to the principle/owner may be obvious and to some extent they are more able to take a chance on their gut feelings about you.
In a larger organisation such as a network, they are much more closely monitored by the FCA, have much less freedom to act outside of their written procedures and staff are much less able to take a risk on you. Look at it this way, if a compliance officer takes a chance on a broker and they commit some major breach of regulation further up the road, the network is likely to get a severe kicking by the FCA, with a dialogue along the lines of “you knew X had committed these breaches in the past but chose to ignore them and take them on anyhow, you have failed to follow your own agreed procedures to ascertain that X is a fit and proper individual”. This could be followed by a fine and maybe even suspension or loss of permissions, with the compliance officer involved given a warning or even sacked.
On the other hand, if a compliance officer accepted a broker with a dubious past who then never committed any breach, absolutely shone in their business career, and made the network a small fortune. It’s unlikely that the compliance officer would get any of the credit for this, so if you were a compliance officer, what would you do?
Finally, remember in most networks recruitment and compliance are very different functions, there are exceptions to every rule but generally just because a recruiter seems happy to take you on, it doesn’t mean that your application will get through compliance. Many recruiters get paid on the number of people brought into a network which means if you spend 6 weeks gathering information, filling in applications and sometimes even attending an induction course and are then kicked into touch, other than the fact that they won’t now get paid for you it isn’t such a big thing to the recruitment department who will have moved on to other prospects. We do realise however that it is most definitely a big deal for you which is why generally even if your business is rock solid with a good income and a squeaky clean compliance record, along with the other research we do for you, we seek confirmation that you will be accepted at director level before we recommend a network.