I refer to the article headlined, Brokers told not to rush into networks, and would like to offer the view of my company, which is committed to becoming a principal and establishing an appointed representative network.
A number of firms have announced their intention to become principals and establish AR networks. None, to my knowledge, has been scaremongering. In fact, I am quite impressed by the honesty of most of the would-be principals, who are genuinely explaining the choices open to brokers with the onset of mortgage regulation.
Indeed, some firms are promoting offerings both for directly authorised brokers and their own appointed representatives. Surely, this demonstrates the recognition in the market that not every broker will want to become an AR and that a genuine choice does exist.
I believe the emerging principal firms should not be criticised for promoting their intentions. The profusion of marketing material and roadshows is helping to wake the broker market up to the fact that regulation is just around the corner and that decisions about the future need to be made soon.
It is ludicrous to believe that brokers are being shoehorned into making irrevocable and binding decisions about their futures at the current time. Final rules still have to be issued and authorisation application forms are still to be produced.
Prospective principals, in line with the rest of the market, will not be able to apply for authorisation until early January next year. Until the principal obtains authorisation, which of course is not guaranteed, he cannot legally appoint ARs.
It must be doubtful whether any agreement made now between would-be principal and broker would be enforceable if one or other decided to withdraw.
I do regret that the regulation debate has become polarised between the supporters of direct authorisation on the one side and appointed representatives on the other. There are certainly disingenuous elements on both sides, who for purely selfish reasons, are not prepared to admit that the opposing side's proposition has any benefit at all for the broker.
I believe the holders of such views are not only deluding themselves but are also insulting the intelligence of most of the brokers out there. They will make their decisions on regulatory status to suit their own individual circumstances but only when they are good and ready. That time is fast approaching but it is certainly not here yet.
Head of compliance,
Genesis Home Loans