View more on these topics

Network protection

Appointed-representative contracts are tightly drafted to confer rights on networks after termination of a contract by the member or the network. Again and again, members contact us to ask what can they do to protect their position.

Members leaving networks find it a whole lot harder than members being welcomed into the fold. Networks have every right to protect their regulatory position and, with increasing frequency, use the commer-cial stranglehold they have to enforce this.

A couple of interesting issues arise with the termination of an appointed-representative contract.

Payment of fees and commission

The termination of a member agreement usually invokes a final settlement of commission and a retention to protect against indemnity risks and regulatory costs.

A network does not have to accept a termination and may stoutly refuse to do so until all outstanding issues on its agenda have been cleared.

This does not give networks the right to starve the appointed representative of earned monies.

You would be surprised just how many niggles and compliance issues can arise to prevent the payment of a final sum.

The method I would advocate is to understand clearly the position on termination before resigning. If the termination is forced on you then you should be in a position to respond quickly.

Unfortunately, many appointed-representative agreements are drafted very widely, which allow the niggles in.

Be clear and request the final schedule of outstanding issues prior to any closing visit. The closing visit is a wonderful excuse of bombarding members with lists of unattended items which undoubtedly string out the whole process.

File copying

If your contract requires you to make copy files to match the regulation then that needs to be attended to. What many contracts do not do is specify who should pay. In that case, insist that the network undertake to pay for the copying. Stand your ground. This is no reason to delay payments owed to you.

Indemnity commission

Where you have an indemnity commission you will need to agree where the liability would fall if a clawback were to occur.

You cannot expect monies to be released to you until the liability has been moved away from the network.

You need to be aware of the position and make your mind up early. Are you going to receive the monies as the indemnity reduces or are you going to novate? If you achieve a novation, tell the network and request payment immediately.


While it is not in your account earning interest, you are losing money.

Remarkably, many app-ointed-representative agreements do not require pay- ment of interest on monies held on your behalf.

Look at the protection clauses on monies you owe and you will see another story – base rate plus 4 per cent and other charges are not uncommon.

When you have worked out what you are owed ask for it. If the network does not pay up without good reason then simply add interest.

You have a statutory entitlement to interest on debts when they are not paid past a due date. The contracts are fairly irrelevant once you request payment of a debt owing.


The Lincoln Five and Spring case shows how dangerous it is for organisations to give incorrect references.

The “industry debt” reference is used without thought on many occasions where people receive references claiming that an industry debt is outstanding.

In many cases, monies owing relate to disputed charges and membership issues. If you feel that you have received an unfair reference, then prima facie you have a claim for damages.


Appointed-representative contracts are easy to get into, very difficult to get out of. Make sure that you understand the termination provisions of your contract.

Be careful if you plan to leave to go elsewhere. Consider the termination clauses and the effect on cashflow of payments being held back. Be prepared and plan how to counter the issues raised.


Giving credit to the less well-off

My predictions for this year&#39s Budget are as follows: Any major changes will be made primarily with an eye to the forthcoming general election. Any income tax changes will continue to be targeted mainly at the needy and low-income groups. Still on income tax, there will be a continuing shift to tax credits. There may […]

Seasonally adjusted building society advances up

Building society gross advances fell by 8 per cent in January, to £1.88bn from £2.04bn in December 2000. But the seasonally adjusted figure of £2.38bn was the highest monthly figure since June 1997, according to statistics from the Building Societies Association.The seasonally adjusted figure for new money attracted as savings was the highest for three […]

IFAs could face legal action on LTC need

IFAs could be sued for negligence if they do not tell elderly clients about the need for long-term care insurance, says IFA Care. Director of education and training Tish Hanifan, who is a barrister, says IFAs could be sued by families of clients who are diagnosed with a debilitating illness if they do not make […]

Black and white in grey areas

The general election is almost certain to follow this Budget within a couple of months. Every political party is now targeting the grey vote as crucial to its election prospects. Take these two points together and you have the potential for this Budget to be the most interesting from a pension viewpoint for many years. […]

Nobody expects the Spanish Inquisition

Paul Fidell, Head of Business Development (Investments), writes about one of the primary challenges for those involved in estate planning. He looks at dealing with investment uncertainty in these low growth, low inflation but still volatile investment conditions. Protection of capital, to leave something for beneficiaries, is a fundamental objective of many people’s plans for […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm