Getting compliance right has always been a key imperative for advisers and now that the FSA is turning up the heat, we all need to ensure that we are running a tight ship. Appointed representatives of networks enjoy the peace of mind that comes with knowing that a helping hand is never far away. Having said that, not all networks get it right all the time and advisers should choose their partner wisely. For directly authorised advisers that need help and support with compliance matters, cost-effective support is available.
This does raise the issue of whether ARs of networks are better at compliance than DA brokers. There are many great examples of both DA and AR brokers embracing compliance within their firms. Initially, when FSA regulation was introduced, some brokers may have thought that they could operate under the radar by going down the DA route. Recent examples of the FSA taking decisive action over less scrupulous brokers has shown that no one is immune and this can only be a good thing for the industry as a whole.
But one thing’s for sure, whether DA or AR, the vast majority of brokers are likely to need some form of help or support to meet their compliance commitments as in the current climate they also need to be concentrating on bringing in income. They will need to focus on building client relationships, farming their client bank and providing advice on a range of products as mortgages take more time to place and there are fewer of them.
AR brokers should be getting clear guidance from their network and if not, they should be asking why not. It is fair to say that the quality of compliance support from networks does vary and those brokers who are not getting the input they need should take decisive action and look elsewhere. Quality compliance support is available to those wanting to take the AR route. Directly authorised brokers should, if they are unsure or unclear, seek compliance support from a consultant although if they have a good relationship with a network, they may well be able to offer support to DA brokers on a menu-based approach.
The FSA have said that where they spot problems they are going to use greater fines as part of the crackdown on failings as well as banning advisers. In a recent speech by Margaret Cole at the FSA on “How enforcement makes a difference”, she was very clear. Personal fines on individuals would be seen as the next big deterrent. Fines of those individuals who hold significant influence functions would be the way forward in the FSA’s battle to ensure that firms did everything that was expected of them.
Given that the current difficult mortgage market is likely to continue over the medium term, it is more important than ever for brokers not to cut corners with regard to compliance, even though there can be a temptation to do so. So both DA and AR brokers should ensure that they are getting the compliance support they need so that they can concentrate on bringing in the income to weather this economic storm.
Sally Laker is managing director of Mortgage Intelligence