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Grant Thornton threatens legal action over Honister bulk transfers

Honister Capital administrator Grant Thornton has written to providers threatening to take legal action against firms that facilitate bulk transfers of ex-Honister clients, Money Marketing understands.

Earlier this month, Grant Thornton sold the firm’s recurring and pipeline commissions to corporate IFA firm MacRobins, an appointed representative of Norfolk-based Phoenix Independent Advisers. Advisers are being forced to pay up to 50 per cent of their recurring annual commissions to novate clients to another firm.

MM understands MacRobins is due to make an announcement today which will address bulk transfers, among other issues affecting ex-Honister advisers.

Standard Life and Aviva have insisted they will push ahead with bulk transfers of clients from ex-Honister advisers who have been reauthorised with a new firm. This will mean adviser will not have to pay MacRobins to novate their clients.

It is understood Grant Thornton sent the letters threatening legal action to providers on Friday.

An Aviva spokeswoman says: “We are comunicating with the administrators but we are unable to comment on any specifics at this time.”

A Standard Life spokeswoman says: “We are in communication with Grant Thornton but are unable to comment on the details. We remain committed to supporting the former Honister advisers.”

Last month, Honister Capital, which includes advisory firms Burns Anderson, Sage Financial and Honister Partners and its subsidiary B-A Financial Limited, went into administration after it failed to secure professional indemnity insurance. The group had over 900 self-employed financial advisers and 190 back office staff.

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Comments

There are 10 comments at the moment, we would love to hear your opinion too.

  1. GT as a business may come to regret this stance, especially when the whole advisory and provider community are against them.

  2. IFA (for the moment) 14th August 2012 at 10:37 am

    Personally I’d be using the Honister/Grant Thornton debacle as a reason to get back in contact with all my clients to explain my services moving forward, explaining the RDR and generally reinforcing the client/adviser relationship.

    Don’t forget the clients will have already had a letter explaining they no longer have an adviser – they are looking to be contacted.

  3. What an utter mess! GT obviously feel they are right but have they really examined what they are chasing? If bulk novation cannot happen then reauthorised advisers will invest time and postage in individual transfers of agency, the net result will be the same, trail commissions left with GT will be the ones that no one wants – value pretty minimal. Others will migrate to new advisers completely and a proportion of those left will then switch off trail post RDR. Whether or not it is ‘legally’ worded, the notion that a corporate entity can ‘own’ a client is rather daft.

  4. I’ve observed this from the outset and applauded all those big providers saying they’ll do this that and the other in support of the adviser, but I wonder if these are all meaningless words based on Grant Thornton’s recent ‘bully tactics’ letters to these companies.

  5. Most providers have clauses that allow them to stop paying recurring commissions on almost any grounds and so I would be surprised if GT could stop these providers.

  6. Grant Thorton is behaving as expected in securing as much money as it can for the creditors but also itself. There is an established track record of administrators (and the banks usually as a major creditor) acting in cahoots to grab as much fee income as they can from a winding up. The people usually getting bullied are the business owners where a viable business is wrecked and small creditors. Shame on GT and high time there was an investigation into such unethical though legal behaviour. The likes of Aviva and Stan life have their own retained barristers, could be entertaining courtroom drama.

  7. chompingatthebit 14th August 2012 at 12:43 pm

    GT’s main argument for their actions are the agreements in place between Honister RI’s and the various Honister companies. Seeing as the Board of Honister Capital could not provide Professionall Indemnity Insurance, which they were contractually obliged to do, such an agreement no longer exists. Also, as the 900 self employed advisors of Honister are now some of Honister’s creditors, how to GT as administrators justify increasing the adviser’s liability by asking for them to buy their own client banks?

  8. Some of the former AR agreements may contain terms that allow survival of certain obligations after any termination of the contract. That is what GT would argue. The PI issue or indeed the removal of FSA authorisation and appointment of administrators may not necessarily enail that the contract “no longer exists”. Only the Courts can really decide. As Andy Newman states, it will be interesting to see how far certain providers will take this matter. Regulatory Legal have written to GT on behalf of certain former Honister ARs and await the response with interest.

  9. I thought is was up to clients as to where the commission goes, if to no adviser then it is the life office that benefits.

    BTW, where is Ivan wotsisname?

  10. The last time administrators tried that with my friends they failed.

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