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SPECIAL FEATURE: To be AR or to be DA

Nia Williams

April 13, 2015

Any brokers who are new to the industry will be faced with the question of whether or not they should join a network or become directly authorised. It’s a question brokers have had to consider for many years but seems to have become even more important since the FSA’s reincarnation as the Financial Conduct Authority and the implementation of the Mortgage Market Review rules. But why is this?

Well, a lot of it is down to unnecessary scaremongering. For some unknown reason there is a misconception among some brokers that in order to satisfy FCA requirements brokers must become an Appointed Representative. The thinking behind this, I presume, is that only with the help of a network can a small brokerage manage to adhere to the compliance rules implemented by the FCA.

Of course, this is most certainly not the case. Yes, areas such as compliance and technology can be costly and this may cause a financial burden too great for some firms to carry. However, there is a huge amount of help available in the market today that brokers can buy in. By partnering with the right firms or clubs and making use of the assistance on offer from trade bodies even one man bands can ensure they adhere to all of the FCA’s rules and regulations.

Of course, there are benefits to joining a network too but it’s important, if you choose to take that option, that you conduct a full and proper due diligence assessment on your prospective network. Make sure they are financially sound and have the correct business model and resources to benefit your business.

Speak to other ARs of your chosen network and find out their views before committing.

Similarly, if you are considering choosing the DA route, speak to other DAs in order to make an objective decision.

Both DA and AR routes have their benefits and brokers should explore both options before making a decision as while it is possible to change your mind somewhere down the line this can prove costly and time consuming.

Don’t assume becoming an AR is the easier option or that being a DA is beyond you. If you are a good broker then you will succeed regardless of the option to take.


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