The Intermediary – April 2025 - Flipbook - Page 66
B RO K E R B U S I N E S S
Opinion
Mortgage clubs:
Best of all worlds
F
or many advisers, going
directly authorised (DA)
is a big business decision.
It offers much more
freedom to run your firm
in a way that works for
you and your clients, a more flexible
commission model, and access to the
whole lender market. But it also comes
with considerable responsibilities.
Most mortgage brokers will
begin their careers as an appointed
representative (AR), operating under
a network or principal firm that takes
the burden of regulatory compliance,
administrative and technology
systems off their plates.
Ultimately, it is the network which
is directly authorised by the Financial
Conduct Authority (FCA); as such, it
offers compliance support, training,
and business guidance within a
structure that all members must
adhere to. That includes strict limits
on the types of advice they allow
members to give.
There are many upsides. The
network handles FCA reporting
and compliance requirements,
and many support lead generation,
marketing and provide fully managed
customer relationship management
(CRM) systems.
There is a cost aached, with the
network and adviser operating on
a commission split model. Other
networks have a fee model based on
turnover, either in addition to the
commission split or as an alternative.
Control and independence
In contrast, DAs have full control and
independence over which lenders to
work with, what types of advice to
offer and which clubs to access product
ranges through.
It comes with higher costs, with
advisers responsible for their own
professional indemnity insurance,
compliance and CRM systems. But
then, DA firms also get to keep more of
their commission.
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The Intermediary | April 2025
There is no one-size-fits-all
approach when it comes to choosing
between the AR and DA routes, it is all
about finding the path that best suits a
broker and their business.
In March this year, the regulator
launched its market study into
how well the distribution of pure
protection insurance products is
working for consumers.
The study will examine whether the
structure of commission encourages
advisers to suggest switching that may
not be beneficial for consumers, if
premiums are being raised by insurers
to pay a higher commission to an
intermediary, if the products provide
fair value and whether the market
supports innovation and growth.
This is just the latest FCA review
that touches on standards, and goes to
show how broad the responsibility of
being a DA is.
Alternative options
While some firms will want the clear
division of being a DA or AR, there is
a third way that can offer the best of
both worlds. This is a middle ground
between the two options, where DA
brokers can still enjoy support and
expertise by becoming a member of a
club, such as TMA.
DAs can access compliance support
options such as file checking,
compliance newsleers, firm
T&C visits along with continuing
professional development knowledge
and skills, training events and other
business development options.
The FCA’s focus is now firmly on
the ability of firms to demonstrate and
evidence how they are ensuring good
consumer outcomes, both today and
ongoing. This requires meaningful
data records, intelligent analysis and
informative reporting. That takes
increasingly advanced technology and
systems that are fit for purpose postConsumer Duty.
All this while still generating and
writing enough business.
ROB MCCOY
is senior product and
business manager at TMA
Structured support
Few DAs are keen to unwind their
firms to return to a network. Yet in
this environment, structured support
services are becoming a necessity.
Tech systems are a big part of this,
but they’re expensive to invest in and
keep at the forefront of a constantly
developing market. Not only are good
systems crucial to time efficiency,
but the right tech can improve the
mortgage application process, reduce
the time to close and help minimise
manual data input.
They offer flexibility whether in
or out of the office and help firms to
manage caseloads and streamline
processes. Mortgage clubs can also
use their wealth of knowledge and
agnostic approach to systems to
support DA firms when choosing the
right tech options for their business.
AR or DA, and with or without
independent compliance support
services, the mortgage market today is
a complex place to operate.
Every adviser I know would say
that all this is secondary to the job
they actually do day in, day out. They
care about their clients, giving them
the best advice and support they can
and ensuring that they have the best
experience possible.
Being a mortgage adviser is
ultimately about doing a good job
for clients. That takes an enormous
amount of time and work in the
background, when most advisers
would rather be dealing with their
client’s needs.
Adopting a hybrid approach that
allows DA brokers to focus on the bit
of the job they’re here to do can take
a huge weight off their shoulders, all
in the knowledge that they have the
support of a big firm behind them. ●
