Tuesday, 16 August 2016
Following the publication of the FCA’s Thematic Review about AR Networks and their Principals, it would be fair to say that there has been more than a little speculation regarding which of them the regulator’s sensational findings were referring to.
I believe that TEn has been the only Principal to admit to welcoming an FCA visit, even before publication of the Thematic Review. Indeed, I have confided to a number of industry journalists since January, “Yep, we had the full colonoscopy.” Having myself experienced a quantity of medical colonoscopies since a brush with bowel cancer in 1993, I do not make the comparison lightly, nor without a clear understanding of the laxative predispositions of either event.
Thankfully and because TEn takes its responsibilities seriously, we can definitively confirm that we were NOT one of the five Principals to have been singled out for sanction, nor, hopefully, amongst the two or three others labelled as generally below par. The fact that the FCA has indicated that we might expect a TEn specific report in due course - no great urgency – that seems vaguely encouraging; nevertheless, we are eager to learn how we might improve our oversight.
In Q1 2005, at the dawn of GI regulation, TEn opened its doors as the first AR network for start-up brokers to become indirectly regulated and to operate as independent brokers generally do, because, previously, they had all been brokers somewhere else. Not every frog we have kissed since then has morphed into a prince, but very few of our tadpoles have turned into less than the common DNA of the broking industry evolved them to be. They are all just brokers.
And yet, it is not enough, it seems, not to be criticised. To be known by any other name at this moment would smell a little sweeter. But what is in a name?
The term AR has long been a concern and not just because Appointed Representative conjures an image of a late model Ford Sierra with its boot full of hair-care products. The main problem is, the regulatory category of AR is too broad and contains too many unrelated species of intermediary. Of the 20,000 ARs in the UK, it appears that barely 2% or 3% of them are primary brokers.
Unknowingly, back in 2005, TEn emulated an AR model for insurance brokers that had emerged in Australia some years previously, with a rather more palatable variation of the AR acronym; Authorised Representative. Sounds better already doesn’t it?
In fact, the original inspiration for the TEn AR model came from the British IFA market and not down-under. That said, there are similarities between the other two that we, alas, do not enjoy. For both Aussie brokers and UK IFAs, the designation AR is, simply, an alternative method of authorisation; indirectly regulated, via a principal/network.
Does a Veterinarian intrude upon IFA territory and sell Poodle Pension Plans? No, because that would be ridiculous. However, all sorts of people who have nothing to do with General Insurance are able to sell GI policies. They merely have to become a member of an AR network that offers a limited range of policy types, focused on an industry in which they operate; and a new sales income stream is miraculously theirs. Is this sensible?
Whilst I would not suggest for a moment that all other AR networks, in particular the non-broker sort, are irredeemably awful; I am reassured that the FCA will move swiftly to improve where it can and remove where it can’t. TEn stands ready to receive our own dose of feedback and to act upon it, even if we are not a high priority at the moment.
Meanwhile, is there nothing we can do about the name? I fancy Broker authorised representative or B.A.R.
Because, let’s face it, everybody appreciates a Bar?