Checking on sub-agents and introducers can save time and cost, says Andy Homer
If you are wrestling with the problem of what to do with sub agents and introducers in the run up to FSA regulation, here's an approach that might just help. We have developed a four-stage planning process :
Stage 1 stock-taking
Stage 2 intelligence gathering
Stage 3 communication and education
Stage 4 reappointments.
In terms of 'stock-taking', it is important to get a full picture of how many sub-agents and introducers you have, who they are, what products they promote on your behalf and, of course, how much business they generate. Stage 1 provides a complete inventory, and becomes a reference for all other stages to work from.
While 'culling' is not on our agenda, it is important to remember that there will be an additional regulatory cost in maintaining these relationships under FSA rules and, like us, you will need to be satisfied that this minimum fixed cost pays for itself. If you haven't got to this stage yet, I'd be worried.
Intelligence gathering is itself a two-stage step. Firstly, you need to find out what these sub-agents and introducers plan to do with effect from 14 January 2005. Are they going for direct authorisation; are they looking to be an appointed representative (and if so who with, and are they looking for multi-principal arrangements); are they planning to join a network; or are they going to pare back their activities to that of introducer status?
Second, it is very important to discover exactly what insurance intermediation activities they perform. I suspect that many who call themselves introducers are actually straying into what will become regulated activities. To this end, there's really no avoiding the perimeter guidance in CP187 to know the very subtle differences between what will, and will not be, a regulated activity - along with all the associated 'ifs' and 'buts'.
Stage 3 is about talking to your sub-agents and introducers - since some (particularly introducers), may not even have heard of the FSA let alone the impending regulation. Many more may possibly think that becoming an appointed representative is an easy cop-out, and so one cannot always rely on the box that is ticked being a certain view of their intentions. The educational element stems from these conversations and is aimed at giving sub-agents and introducers an informed view as to their options. Doing so also improves the Stage 2 intelligence gathering.
The last stage involves developing the due diligence and application form aspects, drafting appointed representative and introducer agreements, and developing an ongoing compliance monitoring process and procedure. These formalities provide us with the instruments to be able to reappoint our sub-agents and introducers in a manner that ensures future compliance.
If you haven't a plan in process you might want to consider the approach described above. The important thing is to proactively manage the future of your distribution, and not allow nature to simply take its course. Now, you know that this is the case, but how much progress have you made? In effect you have until June to 'get sorted'. No one wants the nightmare of a paperchase in the second half of 2004 as the clock ticks down.