We are both driven mortgage professionals with over 25 years of combined experience in financial services. Stephen gained his from a background in advising as an appointed representative (AR) and mine emerged from a background working with specialist mortgage lenders.
We knew that setting up a new brokerage would be difficult, requiring careful planning and compliance, but also exciting and rewarding.
The first decision
One of our first and most important decisions was whether we would apply for direct authorisation or become an AR firm. Both options have their advantages and considerations.
In my opinion, directly authorised firms have the freedom to operate independently and have full control over their business activities. They are responsible for meeting all regulatory requirements, maintaining appropriate professional indemnity insurance, and ensuring advisers are competent and qualified. Being directly authorised, firms must have robust systems and controls in place to manage risk and comply with anti-money laundering regulations.
On the other hand, becoming an AR would mean that we would operate under the regulatory umbrella of a network. Being an AR can offer support in terms of compliance, training, and administrative tasks, which can be beneficial, especially in the early stages of setting up a new brokerage.
However, I believe we would have less control over our business activities, as we would have to adhere to certain policies and procedures.
Yet, I believed direct authorisation provided greater autonomy and flexibility for my business and allowed us to shape it according to our vision and strategy. It also enabled us to build our own brand and reputation in the market. However, being directly authorised comes with those increased regulatory responsibilities and costs, and I needed to be mindful of that.
Obtaining approval
Once we committed to direct authorisation, the next step was to investigate how we were going to prepare and submit the application to the Financial Conduct Authority (FCA).
The process involves completing various forms, providing detailed information about our business, and demonstrating that we have appropriate systems and controls in place.
We knew the FCA would conduct a thorough review of our application. This would include assessing our fitness and propriety as a key person, evaluating our business plan, and checking our compliance systems and controls.
I was informed that the timeline for obtaining FCA authorisation can vary, but most firms can be authorised within six to 12 months.
We decided that we would enlist the experience of a compliance firm and chose to work with SimplyBiz to aid us in this process as well as the compliance going forward. SimplyBiz was proactive and provided the support that we needed.
We completed the application, gathered all of the information required and submitted in mid-2022.
The application was picked up by an FCA case handler in November – five months after submission. There was then a bit of back and forth via email clarifying information on the application and sending additional information such as references.
We were informed in December that all information was received and that our application was sent for sign off. Then we received a minded to authorise notice, confirming we had been approved. We confirmed the date for when we wanted our authorisation to commence and the day we would start trading as Kerr and Watson.
Smoother than expected
The decision to be directly authorised and the overall experience of getting authorised with FCA wasn’t as daunting as I first imagined.
Yes, they asked for a lot of information, yes, it took seven months. But working with a compliance consultancy such as SimplyBiz takes much of the pain out of it.
Would I want to go through the process again? No, but the experience was better than I was led to believe.
