L&G winding down network as it moves towards DA-only model


Legal & General is winding down its appointed representative network as it looks to concentrate solely on distributing through directly authorised brokers.

The group says it is encouraging its ARs to turn DA but firms that do not wish to do so will be offered the chance to join Mortgage Advice Bureau or Stonebridge, two of L&G’s partner firms.

Legal & General Mortgage Club director Stephen Smith says: “Our appointed representatives felt as though the relationship was a bit restricted. And it is as we are their principle, from an FCA point of view.

“They were wanting a bit more of a grown up relationship where we would allow them greater flexibility. The best route we thought for that is to try and continue to do all our commercial business – their mortgages, their life insurance and their general insurance – but we wouldn’t be their principle.

“We are therefore encouraging them to move to a directly authorised model.”

L&G had 60 AR firms in its network at the end of the first quarter and Smith believes many of the bigger firms within that pool will opt to go DA.

He adds: “We think the bigger firms are likely to go directly authorised in their own right and will have significant trading relationships with us going forward. We think some of the small and medium sellers may go directly authorised in their own right, if they feel confident in their abilities to do that.

“Others may feel they are better off being an appointed representative of someone and, in those cases, we are saying: ‘why don’t you go and talk to one of our other big partner firms like Mortgage Advice Bureau or Stonebridge?’.”

He is confident the network will be wound down by the end of the year.

Smith says: “It is not like a shutter coming down. We have been engaging in conversations so I genuinely think the firms would have made their decisions within the next few months and, by the end of the year, they will all be on their way to new homes or becoming directly authorised, which can take six months plus.

“We have no plans at the moment to force anybody but we will endeavour to persuade them to make their minds up and decide what to do.”