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The FSA four are the hot topic at cooler

Guy Anker tries to track down which networks are the mystery quartet

The identity of the four networks that have voluntarily agreed to stop recruiting appointed representatives remains a mystery.

Money Marketing conducted its own extensive research last week to try to discover which firms could be the candidates.

But the findings proved inconclusive as all but one of the 36 firms contacted denied they were one of the network four while the one exception, First4Brokers, is in administration and its administrator insists it does not know the answer yet.

One explanation could be that the four mortgage and general insurance networks may be so small that they have escaped attention. It is worth noting, however, that the list used was passed to two leading figures in the market who felt it was extensive and inclusive of all possible candidates.

London & Country head of communications David Hollingworth says: “Someone must know who the firms are but if it gets out, it could have serious consequences for that firm.”

Money Marketing also encountered some understandable frustration from firms that they were even being asked whether they were one of the four networks but, as GHL compliance director Frank Thurlby said soon after the news broke last month, the fact that the FSA is not naming the firms brings all networks under suspicion.

He added at the time: “This is all a bit unsettling for appointed representatives of the new mortgage networks. Some may be wondering if their principal is one of the four and, if so, what are the implications of the FSA action.”

The regulator insists that it cannot name the firms as no enforcement action has been taken and it will not comment when asked whether it now considers it was an ill-conceived idea to reveal the problem, given the frenzy of speculation that has ensued.

The Mortgage Partnership (MK) director Andrew Sage says: “I can understand the FSA’s reluctance to name and shame these firms as it may cause some panic for their ARs but perhaps they should be outed. If you are one of the four and you lose ARs then you should have got your systems right in the first place.”

As part of the research, 36 networks, or directly authorised firms with ARs, were identified. Twenty of those had recruited since the July 17 announcement by the FSA, which appears to rule them out as being implicated.

Of the remaining 16, 15 denied they were one of the four and the other, First4Brokers, went into administration on August 11. There is no evidence that F4B, which last recruited an AR on February 6, is one of the network four.

Additionally, it was pointed out by Mortgage Next marketing manager Justine Tomlinson that any of the 20 that had recruited since July 17 could have been one of the four firms as it is unclear whether the FSA allowed any applications that were pending at the time of its announcement to go through – another issue where the regulator is refusing to comment.

All those 20 firms either denied they were one of the four when contacted by Money Marketing or had already issued public denials.

Tomlinson says: “One of the firms could be those that have recruited as it would seem fairly Draconian not to allow pipeline business to go through as ARs might already have spent a lot of money applying.”

Many commentators agree the whole issue is attracting more attention than it perhaps warrants because of the gossip and uncertainty that has been generated. The issue is serious but no enforcement action has been taken and concerns have only reached a point where the FSA is working alongside firms to help them get their systems and controls in good order.

But it has become the most talked-about issue in the market. As Hollingworth says, it is “the water-cooler conversation” but he adds: “It is easy from the outside to say it is a gossipy issue but if you are an AR of one of the four networks, you could have been working away as a paying customer with no idea that your principal had inadequate controls.”Those that have recruited APPOINTED REPS since July 17


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