Will I be Accepted as an Appointed Representative by a Mortgage Networkgary
What are networks looking for in a broker?
In spite of what some people think of their chances of being accepted by a network as an AR this isn’t really just a roll of the dice so I thought it might be useful for advisers in that situation to have some idea as to 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, meaning no equity release, no interest only and no commercial business. 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 running a mortgage network is a competitive business 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 maybe £30k – 40K minimum 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 others don’t want to know any business doing less than £50k pa. Horses for courses as they say, but the big thing here is to have some business plan, lead source or track record to back up your projected or expected income claims.
A bad credit history is always a possible problem but isn’t always the game stopper which you might think it is. Its 2017 the recession is now thankfully behind us and if you have had credit problems caused by a rapid fall off in business as long as these problems have been addressed sensibly whether they were CCJ’s, defaults or bankruptcy, depending on your personal circumstances it is still possible to be taken on as an AR. One of the key pieces of information is how the debt was incurred; if it could be classed as frivolous for example then you’ve got real problems. On the other hand if it was caused through circumstances beyond your influence and in terms of a bankruptcy has been satisfied for a year or so then you might be good to go. 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 ever present problem and isn’t getting any easier with lenders now sharing this type of information and under ever closer scrutiny from The Bank of England and the FCA. Having said that Which Network has noticed at least in the last couple of years that the majority of lenders are now beginning to show a little more restraint in terminating their relationship with brokers when they don’t think the cause of a problem is actually mortgage fraud.
Non-disclosure of relevant details to a prospective network is another issue which is often a killer, so whatever you do, don’t think “maybe nobody will notice”. 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 they assumed 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. Non-disclosure always comes as a surprise to me since as a mortgage broker you deal with this problem for clients applying for mortgages all the time, so why would you ever think a network wouldn’t notice the odd mortgage you hadn’t mentioned, the fact that you had been censured by the FCA a couple of years ago or a 3 year gap in your career history. They will do checks and in 99% of cases will pick up on stuff like this so just don’t do it!
So what happens if the worst comes to the worst and the network 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 often recommend is to join a Directly Authorised (DA) mortgage broker or IFA as a Registered Individual (RI) 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 out 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 you and you 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, and the compliance officer responsible could be given a warning or even dismissed. On the other hand if you never committed any breach, absolutely shone in your business career and made the network a small fortune. It’s unlikely that the compliance officer who took the chance on you 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, that doesn’t guarantee that your application will get through compliance. Many recruiters get big bonuses paid on the number of people brought into a network encouraging them to work on a “throw as much mud at the wall as I can and just see what sticks” basis. This of course 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 recruiter who will by then 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 all of the other research we do for you, in the case of any doubt Which Network will seek confirmation that you will be accepted at director level before we recommend a network.