As we draw to the end of 2003, anyone wishing to be directly authorised, and who has not already registered, is recommended to do so at the earliest opportunity. It is also advisable that even if a firm has not made a decision between direct authorisation and appointed representative (AR) status, it registers so that it is prepared, should it ultimately take this route.
Christmas and New Year is traditionally a time for relaxation and reflection. Unfortunately, as we draw nearer to 2004, any planned reflection from mortgage intermediaries needs to be replaced with thoughts on how to meet the challenges of 2004 and, in particular, mortgage regulation.
There is a lot of sympathy with those who are yet to decide between direct authorisation and AR status. This is a massive decision for anyone’s business and not an easy one to make. Most will be aware that the next couple of months are going to be very important in the making of that decision, but how should it be approached?
To begin with, every firm needs to have some form of action plan. That plan needs to take into account the important deadline dates that are involved. For example, should a firm ultimately opt for direct authorisation it needs to have made that decision no later than the end of February. Even then, that will only give one month to prepare and submit the application in time to receive the discounted application fees. If this deadline is missed then it is vital that the application is submitted by 30 April, to guarantee that the Financial Services Authority will process it in time for Mortgage Day.
Should a firm opt for AR status, there are no ‘deadline dates’ to consider but finding a network should not be left to the last minute. This is for several reasons: First, as part of the application to the network, it may be that an individual’s position within the firm, such as director, requires them to be an ‘approved person’. The FSA must be notified of this (by the network) and, considering it can take at least two weeks, until confirmation of that notification has been accepted and received, the network will not allow the firm to trade. Secondly, as part of the application to the network, firms will be required to provide them with information on individuals and the firm itself. This will take time for them to process.
It is also likely that members of the firm will be required to attend an induction course, receive training and sit a test. Until the principal firm is satisfied, it will not officially appoint the firm as an AR. If this is not completed by Mortgage Day, the firm will not be able to trade until it has been. Thirdly, many networks will only take on a limited number of ARs, so do not leave it too late and find the network is full.
Waifs and strays
It would be sensible to say that anyone wishing to join a network should not leave it beyond August to have signed up with their network of choice. That is not to say that there will not be firms looking to recruit the ‘waifs and strays’ during September and October, but this is not a risk worth taking.
So, from what date should intermediaries be looking to sign up with a network? This is difficult to answer because, while a number of networks have announced their proposition, there are still new network offerings being announced almost on a daily basis.
Some firms have also yet to announce their pricing structures, so it is not easy to compare what they are offering and for what cost. This is and will be a very competitive market and those pricing structures could also change as more competition arrives. Recently, Sesame announced that it was offering cash to IFA firms to rejoin them. It is not unfeasible that we will get to a position in the mortgage market where the scramble for members becomes so intense that joining incentives are being offered by a lot of the proposed networks.
It must also be remembered that the networks will also need to be authorised by the FSA and they will not know whether they will be authorised until they get their ‘minded to approve’ notifications. This is likely to be next May at the earliest.
Bearing this in mind, it is probably sensible to look to sign up with the network of choice around late spring or early summer. Having said that, if the firm is comfortable with the network offering there is no reason why it should not do this earlier.
To complete the plan, and to help make the choice between direct authorisation and becoming an appointed representative of a network, I would suggest that one way of doing this is to make a number of lists (see below).