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Guide to Directly Authorised vs Authorised Representative

Published by FTAdviser | Dec 13, 2012

After the collapse of several networks and with fees rising, many financial advisers working as appointed representatives will have pondered the move to being directly authorised by the regulator.

Moreover, with the advent of the Retail Distribution Review some advisers worry that the only way the network model can survice in a fee-based environment is to become more controlling.

This guide looks at the choice between authorised representative and directly authorised, the advantages and disdvabtages of both options, the process of becoming directly authorised and the different responsibilities and costs.

Answers provided by Gary Kershaw, compliance director at SimplyBiz; Campbell Macpherson, managing director of consultancy Campbell Macpherson & Associates; Steve Young, commercial director at Sense Network; Robert Forbes, partner at Plutus Wealth Management, a former authorised representative firm that gained direct authorisation in 2011.

  1. What a network or national firm can do for you

    IFAs can either be an authorised representative of an advisory firm or network, or form their own firm that is directly authorised with the FSA.

  2. Advantages of being directly authorised

    Being directly authorised by the regulator is more than just about standing on your own two feet – though this is still a major appeal.

  3. Disadvantages of being directly authorised

    Network advisers may fear the unknown outside the protective umbrella of the network’s compliance department.

  4. How to become directly authorised

    A firm looking to leave a network must apply for Part IV permission from the FSA and there are no additional qualifications requirements for...

  5. Added responsibilities and costs of going direct

    There will be more compliance and reporting responsibilities, but costs may reduce.

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Directly Authorised vs Network Membership

Q1.  What is the minimum application fee for getting Part IV permission from the FSA?

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Q2.  What does Mr Macpherson say is an important difference between networks and national firms?

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Q3.  What are the minimum capital adequacy requirements for a small firm?

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Q4.  As a DA firm what are your reporting requirements?

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Q5.  What types of insurance cover does Mr Macpherson say DA firms need to get?

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Q6.  How much does running a DA firm generally costs, according to Mr Kershaw?

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