Are DAs getting the support they need?

It’s the age old dilemma in the mortgage industry – become directly authorised or take the appointed representative route and join a network. Both, clearly, have their benefits.

Steve Walker
21st May 2015
Steve Walker Promise Solutions

As a directly authorised broker you have the freedom to take your business in any direction you like. It’s your company and you have complete control.

Meanwhile, for appointed representatives, there’s the attraction of having access to a one-stop-shop of services with exclusive products, enhanced proc fees and even sales tips on hand.

However, while both have their obvious benefits there is one area in which I’m sure those brokers who have joined networks have the advantage and that is compliance.

Networks prioritise compliance highly and, as such, when new regulation is introduced or new sales strategies are recommended it is usually networks that lead the way. This has been evident at various times over the years when regulatory involvement has threatened to shake the market. Following M Day, for example, brokers with networks were no doubt grateful for the support that was available to them in terms of getting to grips with the new documentation and responsibilities that regulation brought. Meanwhile, when the MMR rules were introduced last year, networks were able to guide their members towards acting compliantly in the new regulatory landscape.

Of course, DA brokers were not exactly left in the dark during these challenging times. There was a wealth of information available from the regulator and the trade press, offering plenty of support and advice for both the introduction of mortgage regulation and the implementation of the MMR statutes.

However, there was another shift in regulation last year that perhaps wasn’t so widely covered in terms of advice and support. I’m talking, of course, about the FCA’s regulation of the second charge market after taking over the reins from the OFT. Information on what the regulatory change means for brokers has been released on an almost drip feeding basis without much supporting information or explanation.

I have seen first-hand that networks are leading the way when it comes to the FCA’s compliance requirements for the secured loan market. They are educating their members. Without that option, one wonders – are DAs getting the support they need?

There is a chance that the potential risks have passed DAs by as secured loans are not viewed as part of their core offering. Such an assumption could leave DAs blind sided and unprepared. Are they aware of how they should compare and refer secured loans? Do they understand how consumer complaints may arise from incorrect processes and do they know how to avoid them? The next big mis-selling scandal could well be focused on mortgage mis-selling if brokers are not following compliance procedure, understanding where their responsibility for the client starts and ends and documenting their sales process fully.

There are many benefits to being directly authorised but this status also comes with increased responsibility. You are responsible for ensuring you are clued up on market changes. There is information on offer out there. Secured loan master brokers can help to educate you on the market and the compliance requirements both now and once the Mortgage Credit Directive has been implemented next year. Some have built dedicated processes to support and protect less informed DAs. Make it your business to educate yourself. After all, you know what they say about closing the door after the horse has bolted.

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