Getting it wrong is not an option
Tim Wheeldon is joint managing director of Fluent Money
The debate over the pluses and minuses of network membership ebbs and flows and intermediaries are as polarised as they ever have been as to the merits of DA versus AR status.
It is not my place to comment on the different approaches, except to say that every adviser working either directly authorised or as an appointed representative needs to have a process in place which ensures not only the best customer outcomes but also makes it simple for a regulator or a compliance department to see a clear path from enquiry to completion on every file.
For networks, under whose regulatory approval each AR operates, the issue of working across regulated mainstream business is not a problem. Where they have potential for future issues lies in advice given by members in second charge, bridging and to a lesser extent, commercial finance. Here networks have differed in their approach to what they expect from members. Some have set up relationships with packagers but understandably many AR’s are used to using their own sources and while that has been OK in the past, the regulatory changes may force many networks with their eyes on the future to review their processes or face the potential consequences of being responsible for advice they are not currently overseeing.
While individual AR’s are responsible for the advice they give, the network under whose banner they work carries the can for the advice and no matter how diligent the compliance function is within a network, unless it can check where the member is placing business and have access to an audit trail, the potential liability will vest with the network.
It is clear that with the MCD coming into force in March, network members with access to a full service like ours for all their second charge enquiries, will be in a strong position when full integration of second charges into the MCOB rulebook takes place. It cannot be over emphasised how important it will be to ensure that ARs have access to a fully compliant advice process for second charge lending by the time secured loans finally moves into Mortgage Regulation in 2016. Networks must not only have in place a preferred provider for secured loans, which allows them to track their members’ enquiries to completion but also that the provider has full authorisation from the FCA.
Our experience of working with network members has shown that apart from offering them access to a whole of market proposition in second charge loans, we are also able to provide the advice they and their clients need in a way which is wholly congruent with regulatory requirements, particularly in relation to demonstrating a clear audit trial from enquiry to completion.
So, whichever camp advisers find themselves in as DA’s or AR’s, integrating secured loans into their armoury of client options is going to be all about ensuring that the client has access to the right advice and the path chosen demonstrates a clear, coherent and ultimately satisfactory customer outcome.
Getting it wrong is not an option.
