When I started to write this column I had no intention of criticising the appointed representative model two weeks in a row but I must remain topical and I notice that one network is in the process of negotiating the takeover of four smaller ones. Such consolidation has been well flagged and maybe the only surprising thing is that this has not happened sooner. But such change is not good for ARs and shows why mortgage firms should be directly authorised. I’m sure the predator network is well run – the Financial Services Authority will ensure that – but that’s not the point. Before Mortgage Day it seemed that John Malone and I were the only people promoting and advocating the direct authorisation model. At the time we both listed many reasons why it was better to be directly authorised and came up with post-Mortgage Day business models for DA firms. The point is that most broker firms are small businesses with less than three sales people, and people who stay in firms of that size do so because they want to control their own business. As an AR of a principal this is not possible. As an AR you can only sell products you are authorised to sell by your principal. This means ARs can never control their own businesses. But back to the purchase of one network by another. First, I don’t believe AR firms took the decision to become authorised in such a way lightly. I also don’t believe they decided to join a particular principal without significant investigation. Such research will have included the products they would be authorised to sell and the management structures of principals. It is also likely that their research will have included the compliance process. I’m sure ARs choose their principals for specific reasons, so what happens when a principal is taken over by another network? The ARs will have no say in the decision to sell, they cannot vet the new principal or its procedures and terms and conditions. They can sit it out, move to another network or become directly authorised. So firms that want to control their own destinies can’t and those that picked a principal they could work with might not be able to do so again. The only option is to become directly authorised. Firms might need to buy in support services but they will save network fees and regain control.