Sesame Bankhall Group chairman John Cowan estimates 10 per cent of firms that do not want to join the group’s new restricted model will leave Sesame altogether.
Sesame set out in January that over a six-month transition period all network members would be required to move into its new restricted proposition or become directly authorised, with the option of doing so through the Bankhall arm of the business.
The firm has spoken to around half its 2200 members about their plans. So far 67 have indicated they will not be part of the Sesame network and will go directly authorised.
Speaking to Money Marketing, Cowan says: “We said it would be a six-month rolling programme and we have had very few people leave Sesame. Just over 90 per cent of the people that have said they wished to be directly authorised have signed up to join Bankhall. So a handful of businesses have gone elsewhere.”
Parent company Friends Life earlier today revealed SBG had made a £19m loss following a past business review.
Sesame was fined £6m by the FCA over systems and controls and suitability failings last year.
Cowan says the loss reflects the fine and historic liability costs and is not a reflection of the underlying viability of the business.
He says: “The loss is the fine, the costs associated with past liabilities around pension transfers and provisions for other complaints that we think might come along. It is better to take a single hit and say, ‘this is where we are’.”
“It has clearly been a challenging year. What we are doing here is facing up to legacy issues of the past. And in that sense the way we think about it is we are behaving financially prudently by making provisions for those past misdemeanours.
“The underlying business here is running fine and is quite strong. But we have within the network legacy issues and we are dealing with them. That is all linked to restricted advice and greater embedding of technology into the business.”
Cowan says Sesame advisers increased earnings by on average 12 per cent last year.
He adds the business will look to actively increase revenues over the next 12 months: “The purpose of this business is not just to help people be compliant but to help them build better businesses. Protection is a classic example. We know the general population is under-provided with life insurance protection. And so we can do a lot better in dealing with them. Those are the sort of areas I want to focus on in the next 12 months.”