Despite latest FSA research indicating a rise in DA practitioners for 2005-2006, from 23,511 to 28,969, a broker claimed becoming a DA was becoming too expensive which was stopping the growth of the adviser market.
The source, who wished to remain anonymous, said: “It is very expensive and time consuming becoming DA. Before you even start, the fees are around the £1,000 mark and then you have to get FSA authorisation. It can take a long time to get an authorisation and during this time you are not allowed to conduct any business, so you can’t really do anything. Additional costs, including PI must also be taken into consideration.
“It’s not easy becoming DA, and adding all the costs up it is certainly not cheap,” he added.
Ian Crampton, sales director of Ferndown Ltd, said the rise in DA’s followed brokers’ individual reviews of the market, almost two years after regulation. He said: “Many brokers might have jumped into networks following regulation, but have since found out that it wasn’t as intense as they thought. Obviously becoming a DA incurs some costs and this has to be taken into consideration. However networks all have their own set of rules and regulation as well as costs and some are somewhat restrictive about what its appointed representatives (ARs) can do, so I can see why people have moved to become DA.”
The FSA report also revealed a fall in the number of ARs, from 165,587, to 164,821 in its annual report.
