By Gemma Jarrett, Network Director
Starting out as a business owner in financial services and insurance can be a challenge, not least because of the significant burden regulatory authorisation required by the Financial Conduct Authority (FCA) can be. But being an Appointed Representative can help alleviate some of that burden, allowing you to trade without having to find resource, time and money that you don’t have to become directly authorised by the FCA. Here’s how it works.
What exactly is an Appointed Representative in insurance?
At the simplest level, in insurance, an Appointed Representative is an entity or company linked to a principal firm which uses its regulatory permissions to enable smaller entities to trade in a regulated market.
In other words, the principal is likely to be either a bigger company or a network that already has FCA authorisation across all the different areas and services required. One such principal company, for example, is Stubben Edge. Stubben Edge offers a platform to help individuals and small to medium-sized companies become an Appointed Representative.
Who can be an Appointed Representative?
If you’ve been in the industry for a while, you might find that you’re looking for a change – especially those of you with an entrepreneurial flair.
Whether you’re an insurance broker, an independent financial adviser (IFA) or a managing general agent (MGA), becoming an Appointed Representative is a route that’s open to you. Here is what it entails; the principal firm will be taking on considerable risk because they are responsible for all your FCA-regulated business activities.
Before they sign you up to be an Appointed Representative, you can expect the principal to do considerable due diligence around your experience, your career, your business, and your policies and procedures.
What are the benefits of being an Appointed Representative insurance broker?
Well, the obvious one is drastically reducing the cost and time it takes to be able to actually trade. That means speed to market is accelerated, allowing you to grow your business faster.
“Some of those who become an appointed representative in insurance in the UK are very entrepreneurial but don’t necessarily have resources initially to get bogged down with the back-office admin that keeps them away from looking after their clients,” says Jarrett. “So it helps them remain client-focused while ensuring they are compliant with the FCA.”
Depending on which principal you choose to go with, there may be other big benefits, such as specialised help and advice on matters relating to insurance, a technology platform that allows companies to interact with their clients and markets securely and efficiently, and even white-label products and CRM systems, meaning an Appointed Representative is able to use world-class technology and marketing to help their customers.
“We have a team to help them on business development, sales and marketing, broking and data and analytics if they need it. We treat it as a network that works hard to find solutions for our ARs,” says Jarrett.
What all this really comes down to, though, is the most important benefit of all: reputation-building.
Nothing is more important at the start of a financial business’s life than building a reputation of reliability, compliance, ease of client journeys, and as such, the ease of trading and buying products. Having the backing of an experienced, reputable principal firm is invaluable in that. That’s why it’s so important to carefully choose the principal of which you become an Appointed Representative.
Which Principal should I become an Appointed Representative of?
Whether you’re looking to become an Appointed Representative in insurance for the first time or are thinking of a move from your current principal, you need to think about those benefits mentioned above – from the simple mechanics of FCA regulation right up to all the bells and whistles of a company like Stubben Edge – and balance what you can afford to pay with what you can’t afford to miss.
For example, if you’re starting out on your own and don’t have much money behind you yet, you might just want a very simple deal, but things like a great reputation, speed to market and an easy customer journey will be important to you. Also ask if there are other benefits with the principals you’re considering, such as help with marketing and business development or data and analytics.
Equally, while you might not feel you can afford to invest in technology, the time and money a good platform saves you in admin will probably hugely outweigh the outlay, as well as keeping you focused on your client’s satisfaction.
Some principal companies have a tiered offering, allowing you to invest only in the areas you need to, and to build up as you grow as a business.
“It’s important that we monitor our ARs on a monthly basis and we also do bi-annual audits,” explains Gemma Jarrett, Network Director at Stubben Edge. “That’s to mitigate the risk of any mis-selling, misrepresentation or any issues that could come up that the FCA are concerned about in an appointed representative relationship.
“We have a flexible payment model depending on the position the AR is in. For example, if someone is starting from scratch as a broker, initially they’re probably not going to have a lot of income or funding behind them. So we work with them to find the right solution. We want to ensure they have the best possible start to succeed.
“As part of our due diligence, we look at the financial state of the company, and come to an agreement on where they fall into the pricing model.”
Want to become an Appointed Representative in insurance?
Once you have your list, you need to start making connections with the relevant people, to ask the right questions and decide which one to go with. You’ll find some more information on becoming an Appointed Representative insurance broker, IFA or third party at Stubben Edge’s dedicated portal, where you’ll also find a useful Appointed Representative calculator to work out the benefits to your business, and the contact details to get you started. If you’d like to discuss becoming an Appointed Representative, get in touch.