Is It Time To Be Directly Authorised?

13,500 insurance intermediary Appointed Representative (AR’s) exist in General Insurance and Protection.  The AR route into the insurance market has been made easier by the regime and is now an attractive route into the broker market, with the regulatory burden being led by the Principal. With press articles stating the UK broker market has been in a 15 year ‘super cycle’ with significant opportunities and returns, lasting years, if not decades, it is no wonder there has been an influx of new AR applications over recent years.

Over the last 12 months the tone has somewhat changed. Is this a sign that industry leaders and firms are now reflecting on the impacts of the Consumer Duty Fair Value Outcome, echoing repeated calls from the FCA that Broker Fees and Charges are to be commensurate with the services being provided?

Recent calls to cap commission in Brokers, and a strong defence of the current model mounted by BIBA in their 2025 manifesto demonstrate that commissions will be a significant battleground between Brokers and the regulator. Brokers are looking to counter act the current commercial challenges and are actively pursuing moving from being an AR to being Directly Authorised. Whilst an attractive route into the insurance market, being an AR does come with its own set of challenges and firms are recognising the benefits to be gained from being Directly Authorised:

• Directly Authorised is commercially more viable than paying regulatory hosting fees – Full application, preparation and documentation cost less than the fees paid to a Principal in a year of trading
• Direct Authorisation remove the constraints Principals place on AR’s regarding product and capacity, allowing firms to drive forward their own strategy
• Directly Authorised firms can approve their own financial promotions to unlock their full potential
• Smaller firms do not need a dedicated compliance function although there are some additional regulatory tasks which must be completed
• Brokers can enhance their business value due to the security Direct Authorisation provides
• The PRA, FCA, Lloyd’s, your Insurer partners and an AR’s Principal are all forms of regulatory oversight, therefore reducing the regulatory chain can provide both strategic and commercial efficiencies
• Removes the risk of being de platformed by a Principal

GreenKite have seen an increasing number of our clients transition from being an AR to being Directly Authorised, due to the long-term cost savings, added business value achieved through authorisation security coupled with strategic independence to drive the business forward. This trend looks set to continue, so if you are an AR, it is essential to consider when it might be an appropriate time in your growth trajectory to become directly authorised.

GreenKite have a proven track record and methodology to support your move from being an AR to Directly Authorised. We will help lead you through the thinking, planning and documentation needed to submit a successful application, making the process quick and seamless. If you want to know more about being Directly Authorised, please get in touch with GreenKite to talk about your ambitions and a get your application kicked off.