The FSA's deadline for direct authorisation registration is upon us and the networks are lining up their mortgage offerings.
After April 30, firms are not guaranteed that their direct authorisation applications will be processed in time to continue doing business and networks are seeing this as the perfect opportunity to bring new recruits on board.
The big two networks are going head to head, with Tenet rebranding its mortgage service as Lime and Sesame powering up to provide what it believes will be the top best of breed mortgage panel.
Bankhall is also gathering momentum, scooping up 7,000 broker members in the purchase of norwich Union's mortgage club to add to its own and Prudential's mortgage club.
Smaller networks are also ramping up their offerings. Burns-Anderson has recently set up a regulated mortgage service, encouraging mortgage intermediaries to act as quickly as they can. It has come on the scene late in the day, launching its regulated service just weeks before early registration with the FSA closed at the end of last month.
It is counting on a flood of applications as advisers prepare for the regulatory environment after the FSA takes over regulation of mortgages on October 31.
Burns-Anderson recruitment and marketing director John Hayden says: “Recruitment in the last quarter has been the best we have ever seen and half of this has been mortgage advisers.”
Tenet chief executive Simon Hudson says the firm is getting 30 to 40 applications a month and Lime has grown to 600 members.
Sesame says it has already signed up 1,500 for its new offering although it admits that many of these are not purely mortgage advisers. Product manager for mortgages Andy Young warns mortgage advisers to pick their network carefully. He says: “Some potential principals that apply to the FSA may not even be approved, such as mortgage clubs and packagers. They will be under just as much scrutiny as individual advisers, if not more.”
On the direct authorisation side of the fence, the FSA has been upbeat about the amount of registrations it received before the early registration deadline.
Over 11,000 general insurance and mortgage firms have registered for authorisation since the process was opened on November 3 last year and by March the FSA had received around 5,000 applications from mortgage advisers.
The MCCB estimates that applications from pure mortgage advisers total around 13,000, meaning 7,000 have not yet placed their application or are looking to become approved representatives.
FSA chairman Callum McCarthy says he is encouraged by what he sees as the “generally high level” of alertness suggested by large amounts of businesses registering early.
He says the FSA cannot guarantee that applications completed after April 30 will be turned around by October 31 for the beginning of regulation.
Association of Mortgage Intermediaries director Chris Cummings says the next few weeks will see a big increase in the amount of applications at the FSA.
A few months ago, there was a lot of discussion over which way the marketplace would predominantly fall – towards appointed rep or direct authorisation.
The AMI was predicting a 50-50 split but Cummings now believes that the FSA's numbers seem to be panning out at 60 per cent directly authorised and 40 per cent networked.
But Cummings is expecting another rush of applications to come through to the FSA right up to the April 30 deadline but he warns that if firms have not completed their applications by now it is becoming less likely they will be able to operate as directly authorised firms when regulation comes in.
The FSA has warned that some applications could take up to six months although Cummings believes that most will be completed within eight to 10 weeks.
The FSA is keen to let the market know that even if advisers do not make the April 30 deadline, they should still put their applications in.
The AMI has set up a hotline to help brokers out and Cummings says it has been “ringing hot” with advisers needing help filling out their applications. He says: “Reports that the applications are easy to fill out simply are not true. There is a lot of information and preparation needed to fill the forms out correctly.”
But FSA spokeswoman Kate Bristowe says: “We have streamlined the application to make it as simple as possible.” She says some applications can be finished within 25 minutes. “The important thing is you need to have all your information correct and be able to show your plans for implementation,” she says.
The FSA has already started to go back and investigate firms to make sure that they have the systems that they have declared in their application forms. It has made visits and requested further proof from a number of small mortgage intermediaries.
Cummings says: “Some of our member firms have been told they have 10 days to show they have the plans and infrastructure they put in their applications. Direct regulation is by no means an easy way out.”
The visits send a clear message to the industry – get it right or you will not be allowed to continue once the new regime is in place.