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Honister Capital goes into administration

Honister Capital has gone into administration after it failed to secure professional indemnity insurance.

Grant Thornton has been appointed administrator for the group, which includes advisory firms Burns Anderson, Sage Financial and Honister Partners and its subsidiary B-A Financial Limited. Honister Capital has over 900 self-employed financial advisors across the brands and 190 back office staff.

In a note sent to advisers this morning, seen by Money Marketing, chief executive Colman Moher says advisers are no longer able to write new business, with immediate effect.

Honister Capital Holdings will continue to operate direct-to-consumer business Willis Owen, which will be unaffected by the move.

In the note to advisers, Moher says: “Due to the history of some of our businesses, we have been exposed to large claims relating to business written by advisers who have long since left us and this has severely affected the premiums we have had to pay. The extent of policy excesses and exclusions has compounded this. 

“It is with great regret and sadness that we have to inform you that we have been unable to obtain PII cover for the coming year which means that Honister Capital Limited and its subsidiaries will be unable to trade from today. The business has had no choice but to enter into Administration and consequently you are no longer able to write new business with immediate effect.”

The note says all employees face immediate redundancy, with the exception of certain staff who will be retained on full pay to effect an orderly wind down. 

The administrator’s representatives are holding meetings with advisers today and tomorrow at 10am to outline details of their redundancy packages.  

Nigel Morrison, Alistair Wardell and Richard White of Grant Thornton have been appointed joint administrators of Honister Capital.

Morrison says: “It is unfortunate that the only course of action possible in this situation for the Group is an orderly wind-down.

“No customer should be disadvantaged as the group does not hold client monies, although I would urge any customer who has paid for but not yet received a financial product to contact the product provider in due course.”

In February, Honister Capital chief executive Richard Pearson announced he was leaving the firm after less than a year in the role. Group chief financial officer Moher replaced Pearson in April.

In August, Honister announced it was cutting staff in a bid to reduce its operating expenses as a result of increased regulatory and trading costs and in January, Honister reassured investors that it will be able to meet its liability costs this year in a solvency statement filed to Companies House.

A Willis Owen spokesman says: “Willis Owen and its clients are unaffected by an entirely separate part of the overall Honister Capital Holdings business being placed into administration. 

“We are a directly authorised and regulated business with the FSA and will continue to operate as normal.  We can assure investors that trading continues as normal via the Willis Owen platform.”

Honister Capital was formed in June 2009 when it acquired the principal advisory and direct businesses of The Money Portal Limited in a move that saw the rest of The Money Portal, including national IFA Bates, go into administration with debts of £55m.

The Money Portal acquired execution-only business Willis Owen and national IFA Bates Investment Services in 2003 and Berkley Berry Birch subsidiary Weston Financial Planning in March 2006, as BBB went into administration.

The firm took on Millfield Partnership Limited and the Sage network in July 2006 for £10.5m, with the rest of Millfield placed into administration.

Honister Capital has provided two helpline numbers for affected advisers, which open at 11.30am today. Advisers can call 01482 385385 or 01625 667000 if they have any questions about the firm’s administration.

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Comments

There are 36 comments at the moment, we would love to hear your opinion too.

  1. Great. Another failed umbrella group goes belly-up. Its PI insurers can obviously see what’s about to happen so now the rest if us can pay the claims through FSCS.

    Meantime, the usual suspects of Directors have jumped ship, avoiding liabilities and off to their next ventures, which I have no more confidence in than their long list of past failures.

  2. Ancient Wisdom...is a mortgage broker in N3 3rd July 2012 at 8:43 am

    Phew – Im glad I left them when I did – that place was run by a bunch of retarded individuals with not a degree or ounce of sense between the managers.

    Good luck to the employees – I hope you get your commission. Richard Pearson should have told his employees whats happenning before jumping the sinking ship – however, what goes around, comes around.

  3. Here we go again, first Inter Alliance, then Millfield, then Bates Millfield, then Bates, and now Sage.

    The lack of notice is amazing!

  4. Perhaps we should be asking who will be able to secure cost effective PI Insurance? If the present round of funding via fines for the FSA and Treasury continues and the Ombudsman proceeds along the peoples champion route, it seems likely that many firms will suffer or fail. Maybe less snearing of our less fortunate Industry colleaugues and more action is required.

  5. It looks to me that they cherry picked the best parts of other groups that were in trouble prior to going into administration and now they themselves have gone. I know of other groups that have gone the same way but what annoys me is that their CEO’s are now living the life of luxury. Perhaps I am becoming cynical or jealous even as I am not limited and must see out these difficult times to the very end.

  6. Perhaps the answer to PII is that it should no longer be a condition of FSA registration for firms and each individual adviser should have their own PII.

    That would sort out the wheat from the chaff.

    After all, if a solicitor sets up his/her own practice as a sole trader, they have to have individual policies.
    Most IFAs operate as sole traders even if under the umbrella of a network or larger firm.

    Why not advisers ? After all, if you employ someone you have to have employers liability insurance and it is advisable to combine it with Business insurance for equipment and loss of business through disasters etc.

    The costs of PII for most individuals could be dramatically reduced and only the dodgy dealers would suffer higher costs.
    My current network charges me £1080 pa for my contribution to the collective policy (£90pm) I am sure that I could negotiate a better deal, based on the risk profile of my practice.

    If this was adopted, networks would not have to close down and their RIs would only see those who failed to secure cover, lose their jobs.

    I am sending this in to the FSA as a suggestion. Anyone listening ? Thought not! Better close down this sector once and for all much easier for the FSA.

  7. I see Sage Financial were / are on the Herbert Smith Keydata list…

  8. Paul Matthews 3rd July 2012 at 9:45 am

    I am an adviser with Sage and have had no communication from them regarding this matter at all. I have been informed by your publication via email this morning. The laugh is, they have just completed the annual fitness and propriety for advisers, when are the FSA going to ensure the wellbeing of advisers and ensure these Networks are properly run with the Directors offering personal guarantees. Having been in this position with MBSL (Network Data) we will watch our commission pay of Network debts where as 90%+ belongs to the AR firms not the network.

  9. Howard Townsend 3rd July 2012 at 10:00 am

    Surely nobody can be surprised after the capital restructure in January of this year. Cynically reorganised for failure by the owner and his representatives.

  10. man on the moon 3rd July 2012 at 10:01 am

    The past is the present.

    Legacy carry over is frightening and if the historical track record of buyout companies is unknown then this causes problems for us all.

  11. I wonder where some of the main players in this saga are now – whilst their IFAs pay the price they are no doubt enjoying a Positive Solution elsewhere …..

  12. how many keydata contracts was sold by the positive solution boys ???????????

  13. All your anons & ‘wisdom’s I suggest you get your facts right before you comment. No one did more than Richard Pearson & his two colleagues to save that business & no one is living the life of luxury, other than one person – the owner. If you can’t see something through then don’t get involved because this is financial servies, not selling dresses Mr Simon.

  14. I am a BA member of over 7 years & the takeover upon takeover has been orchistrated by management teams that have made City London Bankers look like Choirboys….. Individuals have feathered their nest quite well while some of us are just trying to earn a living……..

  15. What do you mean Bubble “get you facts right”? Your “facts” are only your opinion. It is a fact that Pearson, Easter and co are all set up with new companies able pick up the pieces they want and once more leave the rest of us to pick up the FSCS tab. I am certainly not living the life of luxury but might get a bit nearer if I didn’t have to pay for the misdeeds of others.

  16. And to cap it all, they have now taken down our email service so we are completely handicapped….

  17. Steve Young (Sense Network) 3rd July 2012 at 11:41 am

    Its a sad day for all the clients and advisers at Honister. We’ve published some advice for you all at http://www.thesenseblog.co.uk. Good luck.

  18. What I dont get is why the individual advisers will now have to wait for weeks, unable to trade, leaving clients (perhaps with urgent needs) unable to receive the advice they need.
    Why cant the regulator allow individual advisors that, as at midnight last night were authorised to give advice, to instantly “reregister” with another directly authorised and already approved firm.
    Maybe its because making it that simple and helpful would reduce the need for such a large empire in the Docklands?

  19. Anon, no I think you’ll find that my facts are facts & not opinion. The people you mentioned have got new jobs, nothing more & have made nothing out of the business, in fact for the hours they worked to save the business the pay by the hour they were probably on less than minimum wage. You need to look to the right people here, the neds & above – fact. I feel very very sorry for all the IFAs & staff involved as it;’s not your fault, but the facts have to be correct

  20. Dominic Thomas 3rd July 2012 at 12:11 pm

    Doesn’t this fly in the face of the suggestion that small firms are unlikely to survive post RDR? The problem with networks has always been the same – control (or lack of).

  21. gary collinson 3rd July 2012 at 12:21 pm

    they will all sleep well, and I guess not give a second thought to the fact that the lack of pipeline/renewal commission coming through might well bankrupt my Company and result in 3 families struggling to survive, absolutely incompetent

  22. Stay clear of Positive Solutions. Look who is running it and where they came from. Go Direct and also stay clear of True Potential

  23. If anyone from Honister is reading this article please reinstate the email system for atleast 10 minutes so that I can at the very least leave an ‘out of office’ message on the system to advise anyone who is emailing me that the system may be out of action for the forseeable future and offer an alternative emergency contact email. Email is so important to my work and now I am worried that my client’s may have issues that I know nothing about! Surely the FSA should be imposing ‘Treating Customers Fairly’ at times like this even if the way Honister have gone about their actions is appauling?

  24. George W Jensen 3rd July 2012 at 5:26 pm

    A dreadful turn of events, and the worst possible advert for a network model that should be there to protect its member firms from exactly this kind of event.

    I’ve had conversations today with a couple of firms who will have lost at least £20-50k revenue with precious little chance of recouping it.

    It’s also telling that the one piece of the Honister business that actually made money was the direct to consumer, zero-service-to-end-client vehicle.

    Honister ARs you have my heartfelt sympathies. Find a quality network such as Sense or Best Practice to look after you, or take the plunge and go directly authorised. Hopefully this will be the last iteration of Groundhog Day…

    GWJ

  25. Anon @ 11:51am

    Having previously worked for the regulator what might be the case here, and what your not bearing in mind, is that there maybe certain practices going on at Honister, by certain AR’s that the regulator doesn’t want to continue, perhaps they have undergone a ARROW visit and issues with certain AR’s (or their advice more to the point) have been discovered.

    Just automatically re-registering everyone isn’t always in the public’s best interest, as sometimes the few problems can rest with the many (the AR’s) and in many instances it will be what the regulator sees as a long list of unsuitable (in its opinion) sales!

    If the FSA has concerns about certain AR’s and what they have been upto, a Network failture is often their way of “slowing” those people up, and sometimes quite rightly (ive seen some awful advice given by a few advisers in the past who really shouldnt have been allowed to carry on in the industry)

    Tied in with the comments made by Dominic @ 12.11pm, lack of control in the networks (often resulting in poor advice) has long been a highlighted concern by the regulator.

    I dont know this for sure, im just using past experience, but calls for the FSA to just “grand-father” everyone on, is missing a trick, some of the advisers might actually be part of the problem!

  26. Whatever you want to be, be it with SBG. Whether your looking for the security of a robust, financially strong Network or a comprehensive DA support service provider SBG is te home for you

  27. I am (was) an IFA with Honister. I have been a financial Adviser for 21yrs. In that time I have worked for 9 companies, had 17 CEO’s (all of whom promised “this time next year Rodney!”) but have changed jobs only once!

    Why is it the bosses seem to disappear with amazing regularity, usually better off that when they arrived, and the poor buggers in the trenches are left to pick up the pieces? Are we that gullible?

    Honister sent an email at 7.18 this morning informing everyone of the Administration and then turned off the email system at 9am. I only found out that my business didn’t exist at 7pm when a (ex)colleague rang me.

    As an industry, I am talking about advisers here, why do we put up with being treated like this by networks and the FSA. I would love to see the day when we say enough is enough and we all go on strike. I wonder how long the industry could survive without advisers?

    But, we carry on in our vain attempt to be treated with some respect. Doubt if I will see it in my working lifetime.

    Busy day tomorrow. For the second time in my career I have to find a job. Bugger!

  28. As a former back office employee of honister, I am not surprised at this turn of events, the ineptitude of the management of the company is breath taking. Clearly this is a forum intended for Ifa’s, but there are back office staff throughout the company who have had to put up with years of mismanagement, and have now been put out of their misery, with no promise of reauthorisation in the near future.

  29. I worked recently at Honister in the BMU reviewing files and have to say that there is NO way that there should be a mass grandfathering. The past records of file checks should be assessed by an independant party appointed by the FSA before any individual is re-authorised – believe me.The FSA have been in several times and the outcomes have not been favourable. My experience there has changed my opinion about the FSA. Previously, I agreed with virtually everything that has been said about FSA practices, attitudes, pay – I don’t need to go on. But now I do see the need to clear out the chaff, I’m afraid it is too late for many clients who have been sold down the river. It is some of the worst advice I have ever seen and I have done this job for nearly 20 years with different networks and providers. There will be good advisers swept up in this too, but this is a time to have clear out. I have also been an IFA for over 15 years so I have been on both sides of the fence.

  30. Re the last message, I have to agree, the network culture of bowing to high earners because of who they are is a contributing factor of what has happened. Weak and incompetent management has caused this, make no mistake.

  31. Now the providers are putting the knife into all the Honister people.
    I contacted Ageas yesterday to confirm that my firm should re authorised in a new home in the next few weeks and asked the position on our pipeline business.
    Our consultant confirmed in writing yesterday that we could transfer all our pipeline business over and we would get paid under our new agency.
    Any cases issued they have no option but have to pay the liquidators, which means we will lose our money!
    10 Minutes ago I received an email form one of my clients who has a pending case with Ageas which says:-
    I had a call from Ageas this morning saying that Honister had gone into administration and did I still want to go ahead with the policies.
    I just cannot believe that they can go that low to people who provide them with business; do they honestly think we would ever use them again after doing this? This we have to look forward to from all the providers. And of course the response was we are only doing our job under TCF.
    “Being true to what matters most, is what matters most”

  32. “Surely nobody can be surprised after the capital restructure in January of this year. Cynically reorganised for failure by the owner and his representatives” – Spot on, this is where people should be looking to place the blame, the owner & the NEDS who got into a business they knew zero about

  33. There are some 900 companies who use Honister for compliance and personal indemnity insurance and the FSA should have much more controls on how networks are controlled and financed and who is allowed to be a director and control this type of organisation, our clients due to no fault of their own have now been left in a very vulnerable position.

    Skandia will no longer offer us access to view our client accounts, just to give basic valuations and answer customer queries on things like simple tax questions and generic information.

    There should be something in place for innocent advisers who due to no fault of their own have their business taken from them overnight.

    The FSA need to ensure that Grant Thornton are reprimanded for there over handed reaction to stopping us accessing data, that clearly belongs to advisers and there business, networks are solely there for compliance support and Personal indemnity insurance.

    The FSA need to consider maybe after RDR well all advisers are qualified to QCF 4 that should a network fail then there is automatic direct authorisation for 6 months to give advisers a chance to get a new network or become directly authorised.

    I would also like the FSA to give guidance to both Grant Thornton on who owns the clients fees that have gone into the business since it went into liquidation and some clear information to the product providers on how we can help our clients and access basic information while we are sorting ourselves out with either new networks or applying to the FSA for direct authorisation, which would be the best route if it did not take six months. As most are proving us internet access however Skandia turned off the site and will not answer any questions which our clients place through us.

    Grant Thornton has asked Inteliflo to delete all our clients information from its systems to prevent us getting up and running immediately, how would this be in the interest of treating customers fairly.

    The network model seems to be now broken, and in my opinion needs to be dramatically changed, but keeping a six months route to direct authorisation is stopping us choosing the right route for our business, without suffering from unquantifiable risk from data protection and client by transferring our clients to direct authorised business that put our clients at further risk of being abused if anything happened to us while we waited for approval, if it takes 6 months then employ more people, or increase your fees.

    The FSA should look very closely at the senior directors who have recently left Honister as it looks very likely that they have been misleading the regulator and all the companies that were relying on them, they should have to fully disclose as do we on a annual basis through credit reports and fitness and proper declarations, and as we are reprimanded for non disclosure so should these directors.

    Grant Thornton need to be very careful, as most IFA will novate clients they want leaving all the rubbish and claims with the FSCS.

  34. Financial Gateway 11th July 2012 at 9:14 pm

    Financial Gateway are always looking to recruit like minded individuals and businesses in to their network. We provide a diverse range of financial products & services for our clients. If you’ve had enough of the constant hassle as an IFA or if you are looking for a new challenge please feel free to call Financial Gateway Head Office on 0845 47 47 411 or send an email to enquiries@financialgateway.co.uk

  35. Hannah Gilsenan 13th July 2012 at 4:50 pm

    I am helping a fraud victim that had a lot of his pension stolen from him by a now convicted and jailed financial advisor working for Burns Anderson under the Honister umberella 2 years ago… he wasn’t the only victim. The Ombudsmen having fully investigated had just reached the point of ordering Honister to pay back all the monies stolen by this individual. It makes me sick that they can put the company into administration and sort themselves out whilst leaving trusting elderly pensioners high and dry – it’s disgusting but doesn’t surprise me in the slighest. I only hope some of the well paid directors and management suffer similar… I have to go and break the news to the 66yr old victim I’m helping now and he will have to sell the home that’s been in his family for 2 generations and move away from the area he’s lived in all his life to keep a roof over his head. He’s a good, honest hardworking person but seemingly just an inconvenient statistic to the Honister group.

  36. Another network failure is not surprising, though unfortunately the rest of the IFA world has once again to pick up the pieces. If any Honister adviser is interested in getting re-authorised quickly and is fed up with the risks with national networks please feel free to contact me.charlesmcginnis@kiddandco.co.uk

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