- to be an introducer - other than Direct Authorisation with the FSA or Indirect Authorisation via a Principal.
According to Mark Mountney, Managing Director of PMM:
“Being an introducer is a very simple, extremely cost-effective and more financially attractive option for IFAs. Direct Authorisation by the FSA will cost an estimated figure of £5000 pa via application and annual fees, Ombudsmans fees, PII premiums and compliance costs.
“To give an example, assuming that the average income (excluding ancillary sales of regulated and non regulated products) amounts to just £250 per case via a procuration fee, the break even (excluding costs of processing these cases) amounts to 20 cases a year. For a practice that handles just a few cases a month we are at the point that it is barely viable. Even if clients are charged a nominal fee, it is still questionable as to why IFAs would want to play this particular game when time could be better spent elsewhere.
“As an introducer IFAs benefit not just financially from the procuration fee, but the potential income of other sales that are driven off the back of the mortgage, eg: Life assurance/savings products, ASU/PHI, B & C. Also, this option takes away the burden of selling and processing the case with the added bonus that clients are serviced regularly.”
Mountney concludes: “This is an important time for everyone in the market place and IFAs need to be sure that the decision on which route to go is right for all reasons – sanity, financial welfare, and for the client's best interest.”
