Now that mortgages and general insurance fall under the scrutiny of the regulator, small firms make up 97 per cent of FSA membership, according to FSA managing director David Kenmir.Many of these firms will have emerged from a non-regulated background so how do they now cope with the new regulatory requirements? Historically, the bigger support networks have accounted for the lion’s share of advice and distribution. However, it now appears this is changing and new opportunities have opened up. An assortment of smaller networks have appeared on the scene, entering the market with a clean slate and some novel ideas to challenge traditional concepts and historically expensive charging structures. Why do we not hear more about these organisations? Is their significance to advice-giving and the product distribution chain properly recognised? Some of these newer and inevitably smaller networks have swept away the one-size-fits-all approach which is still favoured by some networks. Many IFAs have been attracted to a variety of new regimes. These networks seem to have attracted more than 1,500 advisers between them. This is a significant distribution outlet for providers which will continue to grow. Client service is the key to growth and future prosperity for any new business. These smaller networks do not appear to forget who their clients are and who is actually in business to support who. Clearly, a balance needs to be maintained between effective compliance management and the regulatory requirements but excessive prescription will only stifle business. By creating a comfortable and balanced relationship with their members, as well as actively encouraging them to speak to the key directors, these smaller networks have made their client firms feel of significance again. In these days, when commission levels only seem to go one way, reducing operating costs is all-important and clearly welcomed by advisers. Modern IT systems have been developed and designed around the FSA’s new electronic reporting requirements. These systems will also enhance the ability of principals to manage risk more effectively and comply with the FSA’s needs in this area. Some of the new networks seem to have avoided the oldest pitfall – withholding advisers’ commission payments. This will touch a nerve with many advisers. Considerable administration has been removed in some organisations by arranging for commission to be paid direct from the product provider into the adviser’s own bank accounts. This speeds up the cashflow through the business and also helps ensure that advisers can (possibly for the first time) balance their receipts versus what they expected to receive. Compared with some of the traditional arrangements this new approach can cut out significant numbers of acc-ounting staff, eliminate potential input errors and save months waiting for commission payments to be forwarded by the network. Renewal income streams are essential to a healthy IFA practice. Many networks like to take a percentage cut here as well. Whether they have any right to do this, is a different subject altogether. Some of the new smaller organisations exclude this element from their charging structure which will help a practice to enhance its profitability. The small networks have launched their models on challenging budgets, aiming to provide a good professional service which ensures value for money for their members. The excesses and complications of FSA regulation provide a challenge for all adv- isers so a smaller network that is realistic, approachable and provides effective regional support may provide a better solution than a bigger and more remote organisation. There are many benefits from being linked to networks – better commission terms from providers and suppliers, reduced FSA charges and ease of access to PI cover. Combine this with effective, approachable compliance support and wrap it up in a value-for-money package and life could even become enjoyable again. Making life simpler is essential and with that will come the potential for advisers to write more business. This new sector will continue to grow as more advisers hear of their ability to improve the lot of the adviser. There is also a strong possibility of mergers taking place in future, between like minded smaller networks. This will further strengthen what is already an important sector and ensure the long-term future for good low-cost/low-margin networks.