Directly Authorised vs Appointed Representative: Which Route Is Right for Your Mortgage Business?

The AR or DA question follows most mortgage advisers around for years. It usually surfaces properly when a network fee goes up, a lender you want is not on the panel, or you start thinking about what the business might look like in a few years' time.

Most of the guidance written on this subject comes from mortgage networks promoting the AR route or from consultancies offering DA application services. Neither perspective is exactly disinterested. So this is an attempt at something more straightforward: what both routes actually mean, what they cost, and how to think about which one fits where you are now.

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What the two routes actually mean

When you operate as an appointed representative, you carry out regulated mortgage activity under the FCA permissions of a network. The network is the authorised firm. You are not. It holds regulatory responsibility for your conduct, signs off your compliance framework, reviews your files, and answers to the FCA if something goes wrong in your cases.

Going directly authorised means the FCA authorises your firm in its own right. You hold the permissions. You build and maintain your own compliance function. You report to the FCA directly. If a complaint is upheld or a regulatory issue surfaces, it lands with you.

Both can produce strong, professional businesses. They just produce very different ones.

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Compliance: what it looks like day to day

This is where comparison articles usually run thin. They talk about "support" and "autonomy" as if those are self-explanatory. They are not.

As an AR, your network's compliance team reviews your files, issues guidance when the rules change, and handles your FCA reporting. You still have to advise correctly. Your recommendations still have to be suitable. Consumer Duty obligations apply all the way down the distribution chain, so you cannot treat the network as a compliance shield. But the infrastructure for meeting those obligations — the systems, the monitoring, the policy framework — comes from the network.

As a DA firm, you own that infrastructure. A compliance manual does not appear from nowhere. Someone has to write it, update it after every Dear CEO letter or MCOB change, and make sure everyone in the firm is actually following it. For a one-adviser practice, that usually means outsourcing to a compliance consultant on a monthly retainer. As the firm grows and you bring on more advisers, the compliance burden grows with it.

Consumer Duty has made this more consequential. The FCA now expects firms to demonstrate positive outcomes for clients, not just adherence to process. That means ongoing outcome monitoring, documented board-level review (even for sole traders), and evidence that your approach is working in practice. A network does much of this for its ARs. A DA firm does it for itself, or pays someone to help.

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Costs: what you actually pay

Being an AR is not free. Most networks charge a monthly fee, a commission split, or both. Charges typically run from around £300 to £800 per month depending on the network and the services included, with some also taking a cut of proc fees on top. Across a year, the total is often higher than advisers realise when they join.

Going DA removes the network fee, but it introduces a different set of costs. You will need to budget for the FCA's one-off application fee (check the current figure on the FCA's authorisation fees page, as it is reviewed annually), your own professional indemnity insurance (usually more expensive than PI arranged through a network), a compliance support service or consultant, your own technology — a CRM, case management, document storage with an adequate audit trail — and an annual FCA periodic fee calculated on your income.

Once you add those up for a lean one-adviser DA firm, the monthly outgoings are often in the same ballpark as AR fees, but the composition is different. You are buying components separately rather than a bundled service.

The economics tend to shift as turnover grows. At a certain point, building your own infrastructure costs less than the fees or proc fee split a network charges. Most advisers who have made the move say the transition only made clear financial sense once they had a sufficiently strong book behind them.

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Lender access and proc fees

As an AR, you access lenders through your network's panel. For routine cases — standard residential, buy-to-let with a mainstream lender — this rarely causes a problem. The major lenders sit on most network panels. But there will be lenders your network does not carry, or where the network's proc fee arrangement differs from what you might access independently.

DA advisers access lenders through mortgage clubs. Organisations like Legal and General Mortgage Club, Paradigm Mortgage Services, and SimplyBiz Mortgages negotiate proc fee rates on behalf of their member firms and provide access to a whole-of-market lender panel. You are not tied to a single panel. For advisers handling a lot of specialist work — complex buy-to-let, self-employed applicants, later life cases — the ability to place with a wider range of lenders without network panel constraints can change what you can realistically offer clients.

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Autonomy and what you can build

DA gives you control over your brand, your systems, your marketing, and your business decisions. You are not bound by network guidelines on how you communicate with clients, how you price your services, or which referral relationships you develop.

How much this matters depends on where you are in your career. If you have a strong personal brand, a defined niche, and a clear sense of what you want the business to look like, restrictions that come with an AR arrangement can feel like friction. If you are earlier on and prefer to focus on advising rather than running a business, the network's support structure takes significant weight off your plate.

There is a practical growth point worth noting. If you want to bring on subcontractors or employed advisers, the DA route makes that considerably more straightforward. A DA firm can itself become a principal and take on its own ARs. An AR operating under a network cannot generally do the same.

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What happens to your clients when you leave

This is worth understanding before you decide anything.

When an adviser leaves a mortgage network, any regulated business already written stays the responsibility of the network for future complaints. The network is entitled to retain access to those client files. Your exit agreement will normally require you to confirm that access, in case a complaint comes in after you have left.

Whether your existing client relationships can follow you to your new DA firm depends on what your contract says. Some network agreements permit client data transfer with client consent. Others are more restrictive. If retaining your client base is central to your business case for going DA, read that contract before you resign.

The FCA also has a specific process for moving from AR to directly authorised status. You need to apply for authorisation while still operating under the network, then time the transition so your permissions are confirmed before you formally exit. The FCA's guidance on this is available on their website.

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Deciding which route makes sense for you

There is no single right answer, but there are four questions that tend to cut through the noise.

The first is about where you are in your business. Early-career advisers building a client base from scratch usually benefit more from the structure and lower upfront overhead of the AR model. More established advisers with a strong, stable book often find the economics of DA start to work in their favour.

The second is about how much you want to run a firm rather than just advise clients. DA means compliance manuals, FCA reporting, PI renewal, and technology procurement on top of your advisory work. If those feel like unwelcome distractions, a network keeps them largely off your desk.

The third is about your long-term vision. If you want to build a multi-adviser firm, bring in your own ARs, or eventually sell a business with genuine equity value, DA is the natural direction. Equity in a firm you own is a different thing to a strong client base built under a network's umbrella.

The fourth is about case complexity. If your work involves a high proportion of specialist cases where panel breadth matters, the lender access available through mortgage clubs as a DA firm is worth serious consideration.

Plenty of advisers have built excellent practices as ARs. Plenty have gone DA and underestimated the overhead. Getting this right means being honest about where you actually are, not where you hope to be in two years.

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Before you act

If you are leaning towards DA, speak to a compliance consultant before you do anything. Not someone trying to sell you a DA application, but someone who has helped advisers make this transition and will give you a realistic picture of what it looks like for a firm your size. SimplyBiz, for example, has supported thousands of advisers through direct authorisation and offers both compliance support and mortgage club membership for DA firms.

Review your network agreement carefully, specifically the sections on client data and exit terms. Leaving an AR arrangement without understanding those clauses can lead to complications that are expensive to unpick.

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Keeping the admin manageable on either route

One thing DA and AR advisers share: case administration, client communication, and compliance documentation do not get lighter as the business grows. Whether you are managing your own FCA obligations or working within a network's framework, having systems that keep client records orderly, audit trails complete, and communication consistent makes a genuine difference.

Cleera is built for mortgage advisers who want to manage their cases, client records, and documentation in one place, without the usual juggling between spreadsheets, email, and separate portals. If you are thinking about what your back office needs to look like as you scale, it is worth seeing how much cleaner case management actually saves in time and headache.

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A note on what this decision is really about

The directly authorised route gives you control, flexibility, broader lender access, and the ability to build something you genuinely own. It also means taking on regulatory responsibility and funding the infrastructure that goes with it.

The AR route keeps compliance lighter, gets you trading quickly, and means the business of regulatory oversight is largely handled for you. In exchange, you pay network fees, accept panel limits, and operate within someone else's framework.

Neither is easier in every respect. The right choice is the one that matches your current stage, your risk appetite, and the kind of business you actually want to run.

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Nothing in this article constitutes regulatory or legal advice. If you are considering a change in your regulatory status, seek advice from a qualified compliance professional.