Deciding on AR or DA status depends on what suits you

Weighing up which route to take can be difficult each offers benefits such as exclusives or the ability to switch

SALLY LAKER, MANAGING DIRECTOR, MORTGAGE INTELLIGENCE HOLDINGS
SALLY LAKER, MANAGING DIRECTOR, MORTGAGE INTELLIGENCE HOLDINGS

Brokers often ask our advice about whether they should opt for direct authorisation or stick to being an appointed representative.

There are pros and cons to both so here is a summary of the key considerations.

DAs are able to choose whom they use and that gives them access to every club’s exclusive deals.

Having said that, some DA firms align themselves to one club, which means they receive additional benefits wherever possible. For example, proc fee payment within 48 hours.

However, it is frustrating for DA firms not to be able to access firms. The present tighter funding climate means lenders often restrict the numbers of brokers on their exclusives lists.

Lenders are also comforted by the fact that compliance and advice is monitored through the network, and many check the network’s processes to gain peace of mind and to ensure they are comfortable with their procedures.

This does not mean that DA distribution is any less compliant, just that lenders know the processes adopted by an AR network for all their advisers, and that the network takes responsibility for that advice.

It is a comfort factor that is all-important in a world still dominated by risk.

As a business that supports a DA club and AR network, we would always want to offer exclusives to both because that means more business for all of us. But with limited funding that is not always possible.

We are in a world now that means we are not always able to offer all deals to all brokers, but our loyalty to both remains the same. Deciding how much to lend, managing service levels and the amount of risk to take remains with the lender.

There are benefits to ARs of being part of one selected network. They enjoy access to the various exclusives that network offers, but they do not get the exclusives other networks have because they do not have the DA prerogative of switching from one channel to another.

So in this new world no one has the benefit of everyone’s deals, and the utopia of being able to do everything with everyone is no longer available.

All brokers have to make a choice to be either DA or AR and with each proposition comes a myriad of upsides and downsides. It is really a case of deciding which suits you and your business model the best.

Being a network with both options available we try to offer as many benefits to both ARs and DAs as possible.

But when it comes to products the lenders are in a position where they have to select who, how many and which distribution channels they can fund.

They can rarely feed all the mouths all of the time, but a good network will continually be at the table to ensure they are never forgotten.