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ProAct sets up network backed by big life office

Financial services lawyer Pro-Act Legal is setting up a not-for-profit mutual IFA network with backing from a top six life office.

The Transparent network is targeting IFAs who are disgruntled at the high compliance costs of their existing networks by offering a menu of fixed-price services and does not charge a percentage of the IFA&#39s commission.

The anonymous provider backing the project could scoop up substantial IFA distribution at a low cost if the network is successful.

Members of the Transparent network will become shareholders in the mutual company and entitled to vote for board directors.

ProAct Legal partner Gar-eth Fatchett says that, unlike traditional networks, the 0 per cent commission levy eradicates any charge of commission bias by the network.

The network is sending out member packs from March and looking to start up in the aut-umn. It will offer both authorised financial advisers and IFA services if depolarisation proposals are implemented.

Transparent says some IFAs&#39 network charges could be up to 80 per cent lower if they join the mutual network but competitors have dismissed this claim as unrealistic.

Fatchett says: “A mutual allows its membership ownership and access to key strategic decisions. All other networks are for-profit businesses which cannot sit this into their model.”

Tenet Group chief executive Simon Hudson says: “I do not believe this panacea exists. The pure profit margins in networks are so small that the difference in cost will be almost non-existent. If you cut corners on regulation, you end up falling foul of the regulator.”

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