Bankhall has laid down a challenge to rival networks, claiming that only itself and Sesame have the scale to build a workable multi-tie proposition.
Business development director Peter Mann believes there are very few players apart from Bankhall and Sesame able to build an operable multi-tie, underlining the difference between a true multi-tie, which has support struc- tures and an IT platform, and a distribution aggregator, which is largely based on commission and easier to set up.
Bankhall has spent £9.8m so far on its IT offering, which includes a multi-tie proposition as well as an IFA portal, but it says it expects to spend “significantly in excess” of this amount, with some reports putting the figure as high as £15m.
Mann predicts that by 2008 up to 40 per cent of Bankhall advisers will set up multi-tie channels for certain segments of their clients, such as lower-income consumers, with high-net-worth clients preferring to receive independent advice.
He stresses Bankhall's commitment to independence, saying that only a small proportion will multi-tie their businesses entirely.
Sesame expects most of its members to retain their IFA status after depolarisation.
Bankhall is keen to rent out its multi-tie offering and is in discussions with other firms. It originally predicted that half of its income would come from rental agreements but Mann says that a letter sent out by the FSA last week ended any hopes of up-front payments from product providers to intermediaries and means that even fewer players will be able to afford to build a multi-tie.
He says: “The note clearly states the FSA's intentions with regard to up-front payments. There will be no golden hellos and we respect that. Intermediaries should not be given money by product providers just for multitie purposes but this letter will further detract from the desire of many players to multi-tie.”
FSA 'pre-emptive strike' on inducements, p8; Comment, p35