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‘Network members being damaged by weakest firms’

Good quality IFA firms are having their reputations damaged by the actions of lesser companies in the same network, warns Threesixty Services.

The support services firm believes that IFAs delivering best practice are being implicated unfairly where the FSA turns the spotlight on a network because of the actions of firms that might deserve to be singled out.

Partner David Ingram says the result of regulatory checks on networks as a result of these weak links is burdensome and adds unnecessary costs.

He says appointed representatives suffer from overzealous and extensive compliance requirements and increased professional indemnity premiums which are also the res- ult of network-related regulatory checks.

He says by taking responsibility for their own regulated entity, rather than passing it on to a network, IFA firms can benefit from the more competitive PI premiums that are available.

He says it is ironic that many firms criticising the network model have only recently shut down their own networks.

Ingram says: “We work in an industry where you are only as good as your weakest link.

“The network model means that good quality firms are dragged under a regulatory spotlight by the actions of other network members that are beyond their control. The result is burdensome and non-specific compliance requirements and inflated PI premiums.

“Good quality firms would be best advised to take control of their own destiny through direct authorisation. The overall costs are usually cheaper, especially with the competitive PI deals now available.

“It is ironic that some of the firms criticising networks have only recently shut down their own. This is hardly sensitive, given the problems that they caused their members at the time.”

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