The Intermediary – June 2025 - Flipbook - Page 76
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) and, 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
members can give.
There are many upsides. The
network handles reporting and
compliance requirements, and
many with 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.
By contrast, DAs have full control
and independence over which lenders
to work with, what types of advice
to offer, and which clubs to access
products through. It comes with
higher costs, with advisers responsible
for their own professional indemnity
insurance, compliance and CRMs. But
then, DA firms also get to keep more of
their commission.
A path for everyone
There is no one-size-fits-all approach
when it comes to choosing between AR
and DA, it is all about finding the path
that best suits a broker.
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The Intermediary | June 2025
This said, operating as a DA has
become increasingly burdensome
following the implementation of
the FCA’s Consumer Duty rules and
reporting requirements in 2023
and 2024.
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: if 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 it goes
to show how broad the responsibility
of being a DA is.
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
similar support and expertise to what
they would get from a network by
becoming a member of a club.
DAs can access compliance support
options such as file checking,
compliance newsleers and firm
T&C visits, along with continuing
professional development (CPD)
knowledge, skills training events and
other business development options.
The FCA’s focus is now firmly on
firms’ ability to evidence how they are
ensuring good consumer outcomes,
both today and on an ongoing basis.
This requires meaningful data
records, intelligent analysis and
informative reporting. That takes
increasingly advanced technology and
systems that are fit for purpose.
All this while still generating and
writing enough business to keep
balance sheets healthy.
ROB MCCOY
is senior product and
business manager at TMA
Few DAs are keen to unwind
their firms to return to a network.
Nevertheless, in this environment,
structured support services are
becoming a necessity to balance the
expanding needs of a business.
Tech systems are a big part of this,
and 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, the
right technology can help 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, 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. ●
