Sesame has been accused of using “pressure tactics” and restricting firms’ options after giving its members just three months to make a decision about their future.
Last month Sesame Bankhall Group announced it will no longer operate as a network for investment advisers as part of a fundamental overhaul of the business.
Under the new structure, appointed representatives will have to go directly authorised as part of Bankhall, move to a new network partner or leave altogether. The identity of the network partner, believed to be Intrinsic, is expected to be announced before the end of April.
In a letter to members last week, seen by Money Marketing, Sesame says ARs will be given three months’ contractual notice on 30 April to make a decision.
On 31 July, those transitioning to Bankhall will be able to continue to trade until their FCA permissions are granted, and those joining the network partner will be moved across.
All other ARs will leave the Sesame network on this date.
For those who move to Bankhall or the network partner, Sesame says it is likely to offer various benefits, including paying any Financial Services Compensation Scheme interim levies, and not freezing commission accounts.
It will also give firms up to six months to return client files, offer novation support and pro-rata FCA fees so firms are not double charged.
In the letter, Sesame Bankhall Group managing director Stephen Gazard says: “Whatever you decide we will do all we can to help, although I do feel it is important to point out that whilst we appreciate there are other options available to you, it is simply not feasible for us to provide you with the same level of support on the same terms as we are able to deliver through our preferred routes.”
Threesixty managing director Phil Young says: “While it is possible to get authorised in three months, there will be no guarantees and it could take up to six months.
“Sesame is using this as a pressure tactic to bully members into going down its preferred routes. It has a clear commercial interest in doing so and is giving firms little choice.”
Plan Money director Peter Chadborn says members have been put in a “very difficult position”.
He says: “Unless your firm is large enough to have one member of staff drop everything for the next three months and solely work on getting your house in order to go DA, firms will not get this done in time.
“The process will take at least six months and firms are in danger of moving to the network partner without assessing whether it is right for them. How do they know they are not jumping out of the frying pan and into the fire?”
One regulatory consultant, who wishes to remain anonymous, says: “These timescales are fairly par for the course.
“However, given Sesame is carrying out a review into pensions advice, it is conceivable that if this has identified a lot of pensions misselling relating to certain individuals the FCA may want to look more carefully at those advisers before authorising them so the process could take longer.”
Gazard says: “We want to make the transition for firms as easy as possible. The process is more manageable in conjunction with our Bankhall team or AR wealth partner around requirements such as file retrieval, agency novation and clawback liability.
“We clearly do not have the same control if a firm moves elsewhere. Our approach has been designed to ensure that firms have the choice of business models most appropriate to their needs and the support to get there.”
Tim Page, director, Page Russell
Three months is a tight deadline and whatever members do they need to get their skates on. It will benefit Sesame if members go to Bankhall or their preferred network partner, so it makes commercial sense to offer incentives, but it is a shame they are not giving everyone time to transition.