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Friends&#39 axe falls on 700 appointed reps

Friends Provident is shutting down its appointed representative sales business, blaming the increasing cost of regulation for the move.

The division of 700 firms which sell Friends&#39 investments and pension products will close from December 10.

Around half of these firms are expected to seek IFA status. Friends is steering advisers who want to become directly authorised IFA firms in the direction of IFA groups Bankhall and Millfield Partnership.

Head of single tied sales Malcolm McClelland will leave Friends to set up his own IFA business within Millfield.

Friends closed its direct salesforce First Call last year, making the decision to distribute its regulated products through an expanded network of appointed reps but the provider admits this initiative has failed.

The majority of Friends&#39 distribution – 69 per cent in its 2004 half-year results – comes from the IFA channel.

A letter sent to appointed reps this week, seen by Money Marketing, says the company tried to make cost savings to make the operation profitable but the expense of the regulatory environment together with actual and potential compensation liabilities have led Friends to conclude that it cannot make the network of appointed reps a viable business.

Advisers at the remaining firms who do not want to move to IFA status will be encouraged to stay on at Friends as mortgage and protection advisers.

Friends UK distribution director Simon Clamp says: “We expect more than half these advisers to stay to establish the mortgage salesforce. We intend to build this number up but the picture will become a lot clearer after regulation of mortgage business.”

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