Honister Capital administrator Grant Thornton says it has now received “clear and definitive” legal advice that trail commission payments are owned by the company and not individual advisers.
In a letter to creditors, seen by Money Marketing, Grant Thornton says following the legal advice, commission will be transferred to the administrators and MacRobins, the IFA firm that agreed to buy pipeline and recurring commissions from the administrators. The commission had been held in trust pending this clarification.
After Honister entered administration, Grant Thornton sold the firm’s recurring and pipeline commission to MacRobins with advisers forced to pay a one-off charge of between 7 per cent and 53 per cent of recurring annual commission to novate their clients to another firm, depending on which part of the Honister business they were part of.
A creditors’ note to Honister Partners, one of the subsidiaries, says 216 advisers have now paid to novate, amounting to 36 per cent of the reauthorised advisers. Honister Partner advisers were charged a 7 per cent novation fee.
MacRobins has so far raised £266,000 through sale of commissions back to Honister Partners advisers.
A 10 per cent administrators’ fee was also charged on top.
The letter also confirms that over 300 claims against the failed business have landed with the Financial Services Compensation Scheme. Honister entered administration in July after failing to secure professional indemnity cover.
Grant Thornton says there were 192 complaints against Honister Capital upon its appointment in July and a further 112 have been made since.
Out of the 304 complaints, 167 relate to Burns Anderson, 84 are from Sage Financial Services and 47 relate to Honister Partners. The origin of six complaints is currently unknown.
Grant Thornton says Honister’s former professional indemnity insurer Liberty Mutual, claims it is not responsible and complaints are currently being dealt with by the FSCS.
The administrator adds it has now been given definitive advice which confirms commission payments are owned by the company and not by the individual advisers.
Grant Thornton says it is currently investigating the restructure of the group in December 2011 which saw Honister Capital’s direct arm Willis Owen moved to a separate company and fall outside the insolvency process.