Steve Swyny, Commercial Director at F4B Network
The distribution landscape has evolved beyond all recognition over the years, largely in line with the growing importance attached to brokers and although we have seen fewer shifts in more recent times, the reliance on the intermediary market has only amplified from a lending perspective.
Networks, mortgage clubs and packagers remain crucial in providing lenders with volume and quality of business, especially in the specialist markets. As such, relationships and trust continue to play a major part in how lenders go about setting up their distribution channels. What’s not always talked about so much is the education and support process provided by distributors which offers brokers the confidence and backing to explore new markets and opportunities.
When it comes to networks, the role of the principal will continue to change and this is evident in the recent publication of a consultation paper from the Financial Conduct Authority (FCA) which will require firms to annually verify their ARs’ details and report to the regulator whether details remain accurate and confirm the activities they permit their ARs to carry out. Firms will also be required to submit complaints and revenue data for each AR and assess senior management at ARs for competence and capability.
The City watchdog said firms will need to be able to explain the AR’s business model, including any activity it undertakes, and the primary reason for the appointment. The regulator is said to be alarmed by the level of harm it has detected across the sectors, which it said stemmed from the lack of due diligence before appointing an AR, or from inadequate oversight after an AR has been appointed.
It’s a positive for the industry as a whole to see that the FCA has already started work looking at high risk ARs and these proposals will build on that work. The regulator wants to ensure that principals are properly overseeing their appointed representatives, ensuring they are competent, financially stable and delivering fair outcomes for consumers and this is an approach which should be commended.
Developing a comprehensive network offering is no easy task and this is something that we, as a business, certainly did not enter into lightly. As a relatively new network, we are in a fortunate position to have no legacy issues with AR firms who may have become less competent over the years and no longer delivering fair outcomes for consumers. In addition, our core proposition is not just focused on working with firms and individuals who are performance oriented. We aim to provide advisers with the tools, solutions and support to meet their clients ever-changing needs from an admin, packaging and compliance perspective.
A good network needs to be invested in their ARs from the start and throughout their development. It’s all about quality rather than quantity and this also applies to the business they are writing and the service standards they are maintaining. And I’m sure that this is an area which the FCA will continue to closely monitor in 2022.