Ex-Honister advisers have begun weighing up their options following this week’s administration and warn of the difficulties ahead along the various paths to reauthorisation.
Honister’s failure to obtain ongoing professional indemnity cover pushed it into administration on Tuesday morning, with many advisers learning of the firm’s fate either through the trade press or by rivals’ approaches to take them on.
Advisers expressed their anger on the Money Marketing site earlier this week at being left unable to advise and with any pipeline and trail becoming an asset of Honister Capital for administration purposes. Monthly trail commission payments due on Monday were not made and the administrators will not be accepting bulk novations of clients to new principals, meaning advisers will have to get individual client servicing letters to allow the continued payment of trail to their new firm.
A number of large distributors say they are offering support to advisers who may want to become an RI or AR with them.
Clive Lewis Financial director Gary Collinson says the ordeal has led the firm to pull out of giving advice altogether and it instead will look to act as an introducer. Clive Lewis has two advisers and has been with Burns Anderson, a Honister Capital subsidiary, since 1998.
Collinson says: “We will be introducing business for a small fee to someone else and that is where it will stop for us. We cannot afford to wait to get reauthorised. We have not got the money we are owed already and cannot continue without bringing money in. It is such a frustration and it is sickening.
“Burns Anderson has had its pound of flesh. It grieves me that we are scrutinised to the finest degree having never had a complaint yet they get away with being insolvent at the top. What is the point in us being solvent or professional if the overarching company is allowed to reach this stage?”
Shepherd Insurance and Mortgage Services director Mike Osmond says the firm has yet to consider what authorisation route to take because its priority is to ensure its clients are going to continue to be serviced. The firm has been part of Burns Anderson since 1995.
Osmond says: “We have to make sure the clients are going to be okay and that is the main concern at the moment, authorisation is not what we are focusing on at present.
“What I do find strange is that at 7.11 on a Tuesday morning you can be allowed to give advice on some pretty complex issues and at 7.12 you cannot even talk to clients about an Isa.”
One anonymous adviser says although networks are offering Honister advisers a route back into the market, they are not telling advisers the whole truth about how long it will take to become authorised again.
He says: “The large networks are saying you can be authorised within a few days but the FSA standard will tell you that it can take much longer. The recruitment guys will tell you it takes seven days to get you to sign the form.
“The problem the industry has is that directors of large networks borrow money and unfortunately the personal guarantees for the firm are advisers’ trail and follow on commission because the network knows if something goes wrong there will be six months of commission to come in after the collapse.”