The Choices Available

So you have what it takes – what are your options? There are two basic routes to obtaining FCA authorisation; appointed representative and direct authorisation.

In the past becoming directly authorised was the usual route to starting an insurance brokerage. However, following the lead of the general financial services sector where the appointed representative model is wide-spread, there has been a significant rise in the number of appointed representatives amongst the general insurance sector. In fact, this model is now widely acknowledged as an alternative to the more traditional approach and a growing number of businesses have made this their preferred route.

The table below provides a comparison between the two models. Not all appointed representative models are the same and the following is based upon Momentum’s broker network model.

appointed representative or directly authorised options - cross roads
Directly Authorised Momentum Appointed Representative
Authorisation Process The process is undertaken directly with the FCA and can be a complex one. The FCA do provide lots of advice to get you off on the right foot.

Timescales can vary and within their service charter – the FCA website currently states “we have six months from when we receive a completed application to make our decision and the earlier of (a) 12 months from receipt of an incomplete application; or (b) six months from when an application which was incomplete becomes complete. (An application is incomplete if information or documents required to be submitted as part of the application pack are not provided.)”

This is undertaken by the Momentum and a combination of our own due diligence and FCA application process. Generally timescales are a lot shorter as the FCA have already satisfied themselves regarding Momentum’s process, systems and controls.
Authorisation Cost The amount will depend on whether the application is straightforward (£1,500), moderately complex (£5,000) or complex (£25,000). Most financial advisers, mortgage brokers and general insurance intermediaries will be straightforward applications. There is little or no cost as the activity is undertaken by Momentum.
Capital Requirement This will be based upon the permissions you have and can vary between £5,000 and £50,000 as a minimum. The FCA capital adequacy requirement is met by Momentum so the only capital required is that needed to run the insurance brokerage.
Governance The firm will need to manage how they run their business by establishing good governance systems and controls. Momentum will supply a framework for the business to operate within.
Insurer Agencies Building an insurer agency base can be challenging and not all insurers will be prepared to provide an agency and if they are they may require Personal Guarantees. There are a number of networks who can provide access to insurers and membership costs vary. Placement is via Momentum’s agency base.

This is comprehensive (over 200 agencies) with access to a broad range of insurers and products.

Client money handling All client monies are handled by the broker so they will need appropriate systems and controls in place to adhere to FCA rules. All client money is handled by the Momentum. We will be responsible for cash collection and insurer reconciliation.
Client ownership Always yours Not all Principal firms allow appointed representatives to own their own clients, but with Momentum your clients are always yours.
IT/Systems There are a myriad of different insurance trading platforms available. The choice will depend upon the nature of your business and of course the cost. Operational efficiency is very important to all businesses and features such as single keying, document production and e-trading capability can be very helpful. Momentum will provide you with the Acturis trading platform. Acturis is the market leading system for insurance brokers.
FCA Reporting The broker is responsible for meeting the FCA reporting and timescale requirements. Further information is available from the FCA website. Momentum is responsible for FCA reporting.
Professional Indemnity Insurance In order to be authorised the FCA require proof of adequate levels of Professional Indemnity insurance. Appointed representatives are covered under Momentum’s policy.
FSCS & FCA Fees These are the responsibility of the broker. These are covered by Momentum.
Other Support There are numerous areas of additional support that are important for any new business. Typically this will range from systems and compliance to marketing activities. A number of insurance networks will provide access to these services as part of their proposition and these may be included in the cost of membership or as an add-on. Take a look at the broker services we offer to our appointed representatives.
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There are two basic routes to FCA authorisation – appointed representative and directly authorised



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