Why recruit appointed representatives (ARs)?
To answer this question, we have to consider why firms set up mortgage networks in the first place.
Pre-‘Mortgage Day’, networks were either tied channel distributors or IFA networks, regulating and providing services for insurance, pension and investment advisers. Most brokers used mortgage clubs and packagers without the need for regulation.
ARs provide networks with streams of income from services provided, such as packaging, insurance and non-regulated loans, in exchange for compliance peace of mind.
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The majority of networks fell short of recruitment targets, mainly due to the large number of brokers who registered directly with the Financial Services Authority. By achieving critical mass, profit margins improve dramatically as the basic infrastructure costs are already in place.
ARs have been reluctant to change networks, unless forced by closure. The reasons are the fear of loss of revenue due to withheld commissions and delays in obtaining authorisation.
Those mortgage networks who have increased numbers have either achieved this through open cheque books or recruiting newly qualified brokers through academy programmes.
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