Ex-Honister Capital advisers have reacted with anger to news that the firm’s recurring and pipeline commissions have been sold, with advisers forced to pay up to 50 per cent of recurring annual commissions to novate clients to another firm.
Administrator Grant Thornton yesterday announced the sale of the commissions to London-based IFA MacRobins, an AR of Norfolk-based Phoenix Independent Advisers.
It says: “The administrators have sold the commissions to a specialist corporate IFA company and provided a mechanism whereby the offer group can acquire the ongoing commissions through novations.
“This can only be done where sufficient value is received in the form of an upfront payment to ensure that the overall dividend to non-advisers creditors is maintained.”
Sage Financial advisers will need to pay 20 per cent of annual recurring commissions, Honister Partners will have to pay 7 per cent, B-A Financial advisers 3 per cent and Burns Anderson 53 per cent.
Earlier this month, Standard Life and Aviva said they would accept applications for bulk transfers of clients from ex-Honister advisers without the consent of Grant Thornton.
Aviva says the announcement should not affect the transfer process. A spokeswoman says: “There is no requirement for us to make any payment of pipeline or ongoing commission following the termination of the agreement.”
Lucra Independent Financial Advisers was an appointed representative of Sage. Director Bob Lang says: “It is absolutely digusting to ask for a percentage of our commission.”
Eskdene Associates director Ian Brown says: “Even if Grant Thornton has got the legal weight behind it, it just does not seem right. It is another thing that has made the hairs on the back of my neck stand up.”
Many other ex-Honister advisers have expressed their anger on the Money Marketing website.
Aifa policy director Chris Hannant says: “It raises interesting questions about who owns trail commission, the network or the adviser?”
Facts and Figures managing director Simon Webster says: “There is no way advisers will pay to novate clients. It will simply encourage them to get transfer of agency from individual clients to avoid paying the administrator.”
Tenet is looking to take on a large number of ex-Honister advisers. Distribution and development director Keith Richards says: “If this solution had been offered from the outset, the option may have been considered a viable and faster route to re-establishing servicing rights, but we understand that a number of providers have already stopped paying trail commission, which means that the administrators have less assets to sell on.
“Additionally, a few providers are offering bulk transfer arrangements to assist affected advisers re-establish trail more quickly, with the remainder redirected through individual ‘letters of authority’, of which many are well progressed.
“It should be remembered that no-one owns the client and it is their right to decide who they wish to deal with.”