Indeed, increased regulatory scrutiny from the Financial Conduct Authority (FCA) will make deciding between AR or DA an even more intricate decision for brokers. So, what do brokers need to consider when making the decision to be an AR or DA adviser?
AR or DA?
Many new or smaller businesses may choose to start as ARs, allowing them to concentrate on the core business fundamentals.
This is made possible by a network, like Primis, which provides a back-office platform, compliance, regulation, and technology. Being under the regulatory umbrella of a larger network as an AR can certainly offer peace of mind, and allows brokers the time to build and develop their business.
Another benefit is the provision of all ongoing compliance and business development support to ensure you consistently meet FCA compliance requirements.
ARs can also gain from extensive training and development, as well as access to expert advice on specialist areas where some brokers might seek additional support.
On the other hand, being directly authorised means brokers can run all aspects of their own business without the confines of being led by network policies and requirements. However, this does mean that brokers must take care of all facets of the business, including compliance, regulation, and professional indemnity insurance.
Being directly authorised by the FCA gives business principals a greater level of autonomy in how they run their business, obviously still within the regulatory requirements outlined by the FCA.
This can require a significant investment of time and regulatory understanding, however it grants full independence when it comes to choosing how principals run their business and tailor the services and product areas they offer to their customers.
Going hybrid: the best of both worlds?
DA brokers can still get assistance by being part of a mortgage club, like TMA. Many Mortgage Clubs can provide similar support and expertise to that of a network, including compliance support options, such as file checking, compliance newsletters, firm T&C visits in addition to CPD Knowledge and skills, training events, and other business development options too.
In essence this is a hybrid option.
Through its relationship with Primis Mortgage Network and LSL Financial Services, TMA can provide brokers with support and compliance services through a ‘network lens’ .
The updated FCA strategy document 2022-2025 has made it very clear that it is now focusing on outcomes or results rather than being driven by process.
The chief executive led with a statement of seeing the emergence of a new focus by the FCA in terms of being more innovative, more assertive and more adaptive. The regulatory roadmap provides an insight into the FCA’s activities and actions. It has shared its commitments based on three key areas:
- Reducing and preventing serious harm, harnessing data to assess problems
- Setting and testing higher standards, which is evident in the new consumer duty policy statement, and
- Promoting competition and positive change, with greater regulatory open-mindedness
TMA Mortgage Club and Primis will support firms with these regulatory changes while maintaining a watching brief on the impact of the FCA’s AR regime consultation, too.
The importance of technology
One part of a broker’s potential time efficiency, whether you are AR or DA, is to align your sales process, business data analysis and reporting optimisation by using technology and customer relationship management (CRM).
A recent survey found that brokers were well aware of the benefits that technology can bring to them.
The overwhelming majority of brokers, 99 per cent, believe that technology can help improve the mortgage application process, while 70 per cent think it will reduce the time to close and 67 per cent think it can help minimise manual data input.
Indeed, technology allows flexibility whether in or out of the office, as well as helping to manage caseloads and streamline processes.
Mortgage networks, including Primis, are evolving to ensure they meet the needs of a changing mortgage landscape, especially the rapid shift towards technology.
At Primis, brokers can access Toolbox, its white-labelled back-office CRM system designed to help brokers service their customers easily and efficiently. Through the client portal, clients and brokers can communicate via messages, exchange and transfer documents securely and complete elements of the advice process online.
However, these benefits are not just restricted to ARs. For DA advisers, mortgage clubs, such as TMA, can also help by using their wealth of knowledge and agnostic approach to systems, to support DA firms in making choices to elect from a wide variety of systems to best meet the member firms requirements.
One further example is to elect for a module of a system, such as TMA’s newly launched Quick Quote, which can enable advisers or their administrators to compare quality products for their clients and put ‘them on risk’ in less than 15 minutes.
Given that in the FCA’s latest business plan highlighted a data-led approach to regulation, technology is going to play an increasingly important role in allowing DA firms to report on consumer outcomes effectively.
So, to summarise, AR status or DA, with/without independent compliance support services, can be a tough decision with clear benefits to both. Whichever route brokers choose, leveraging the support of a network or mortgage club can play a central role in helping them reach their full potential. Most importantly it ensures that we all work together to deliver customer-centric quality knowledge and advice.