Having issued a number of fines against directly authorised (DA) brokers in recent weeks, Justine Tomlinson, marketing director at Mortgage Next, said the FSA did not have the manpower in place to police all DAs and would try and persuade brokers to become appointed representatives (ARs).
She said: “In my opinion, the FSA will have no option but to make it more attractive for DA brokers to become ARs, rather than remain directly regulated by the FSA. Unfortunately the FSA doesn’t have the resources to put DA brokers under the same scrutiny as networks, which gives the FSA a problem.”
She added: “The FSA has no option but to make life a lot tougher for DA brokers in the future. Networks have invested millions in staff, training, process re-engineering and professional regulatory control systems. Networks are the police force of the FSA and the FSA can no longer afford to leave half the broker community un-policed.”
However, Robin Gordon-Walker, spokesperson at the FSA, denied the regulator was pushing brokers to go down the AR route. He said: “It is a decision for firms to decide. Our regulation has no intention of trying to herd into other directions. We do have the capacity to supervise all of the DA firms and will always have that capacity through the small firms division.”
He added that the regulator kept track of the number of ARs and DAs in the market, but would not seek to push them down a particular route.
