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Sesame’s network makes £2.5m loss and pays out £11.4m in claims

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George Hgginson: We are investing millions

Sesame Limited made a loss of £2.5m in 2011 and paid out £11.4m in claims, whilst setting aside £7.4m for future complaints.

The network’s loss follows a profit of £1.1m in 2010. Sesame attributes the loss to investment in new services for members ahead of the RDR.

The £7.4m complaints provision is 12 per cent down from the £8.4m set aside in 2010. The firm had 517 complaints upheld in 2011 which it says relate to advice that was given over a number of years.

The 517 complaints is 17 per cent of all complaints received which the firm says reflects the number of erroneous cases generated by claims management companies.

The number of outstanding complaints at 31 December was 287.

The network’s turnover increased 5 per cent from £162.9m in 2010 to £170.3m in 2011.

The number of investment advisers fell 12 per cent to 1,202 from 1,379. The number of mortgage and general insurance advisers rose 3 per cent from 995 to 1,020.

Its results form part of the overall Sesame Bankhall Group accounts, revealed earlier this year, which show the group made a trading profit of £2.2m in 2011, down 56 per cent compared to £5m in 2010.

Sesame Bankhall Group chief executive George Higginson says: “As part of our long-term strategy and commitment, we have been investing millions of pounds to ensure firms are in a strong position post-RDR. Our strategy is on track and is helping to put Sesame and its members in the strongest possible position going forward.”

Access Wealth Management partner Jim Clancy says: “You only have to look at what happened at Honister to see how much strain networks are under. I do worry for the future of the network model.”


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There are 15 comments at the moment, we would love to hear your opinion too.

  1. Ancient a mortgage broker in N3 9th August 2012 at 11:53 am

    ..oh dear, I give Sesame 3 yrs before they go bust too.

    The writing is on the wall for Networks, advisers, IFAs and providers once RDR kicks in.

  2. If they’re making this size of loss and losing 12% of their member before RDR what on earth does post RDR offer?
    I can see total meltdown in this industry and what makes it worse is the architects of this mess are all bailing out with their gold plated pension’s intact and very nice gardening leave thrown in until the end of the year. I also have to laugh when I read this is for the benefit of the consumer and the industry in general. Sesame says they have borne this cost to ensure firms are in a strong position post-RDR.
    They will have to hope their members are still with them as its forecast anything up to 30% will leave the industry following RDR and if that’s even half right this doesn’t bode well for the future.

  3. Isnt this headline misleading? The group made £2.2 million with the network losing £1.5 m. I gather they have just increased their network fees. Looks like good management to me!

  4. Typical press headline. As Julie says, £2.2m profit, not interested. £1.5m loss in part of a company – banner headline and forget the profit part.

  5. looks like the group has made a fair profit to me.

    I do worry about the future for this type of organisation as their members tend to be the lower quality end of the market. I doubt these guys are going to be able to demonstrate value sufficiently to charge fees.

  6. Soren Lorenson | 9 Aug 2012 1:54 pm

    “I do worry about the future for this type of organisation as their members tend to be the lower quality end of the market. I doubt these guys are going to be able to demonstrate value sufficiently to charge fees.”

    And, what actually do you base your enlightened view of network members on? Or, are you just spouting total rubbish? I guess RDR is right up your street then, and the “lower quality end of the market” in your words not mine, should get out of the business now and leave it to the likes of you.
    I suspect you work for the FSA because it’s highly unlikely an IFA would make the comment you just have unless of course they have a highly inflated opinion of their self-worth and an ego to match?

  7. its a nonsense return on capital and this business is dead in the water.
    Great turnover but pitiful margins with zero chance of improvement and by the looks liabilities which cannot be properly quantified.
    Farewell Sesame

  8. If indeed as one pundit put it, the writing’s on the wall for networks, then the FSA must take appropriate action to ensure advisers have an Indivdiual authorisation to trade so that if the network ceases to support them, they can simply carry on trading in their own name.
    I believe that is how the US model is structured and they don’t seem to have this problem of networks being placed into administration and 100’s of advisers losing their business and income.

    I personally don’t believe that networks are doomed, they will need to change, adapt their offering to members and support the changes coming into force.

    HOWEVER, it is clear that the FSA has had for some time a hidden agenda regarding how RDR is going to cull the IFA sector and render it to small to survive. That way their buddies in the banking sector to which many of these malign nut jobs go when they leave, will enable them to keep a job and their pensions and their excellent lifestyle.

  9. problem is that this will get worse. management still think they have a distribution business whose main aims are to load premiums, load platform costs, load fund costs and levy fund managers etc for distribution access.

    needs new management and new mindset

  10. Be careful what you wish for as far as the demise of this network is concerned, if it fell on the FSCS and all the others do the same there won’t be enough of you to foot the bill.

    Another cunning plan our government tasked to its pet regulator?

  11. To Soren

    Us guys at the “lower quality end of the market” have produced a combined annual turnover of £170 million, may i ask what your annual turnover is? lol don’t talk rubbish

    Why do think we will find it harder than than others to charge fees / demostrate value, all such plans are now well under way, i suspect you feel superior because you are directly authorised ?

    Sesame member
    DipPFS (all exams past at first sitting)

  12. Sesame member
    DipPFS (all exams past at first sitting)

    You might have enhanced the argument with ‘passed’ instead of typo’ing past. 🙂
    Unless of course you had a look at the cii manuals and decided you were past it…???

  13. James,

    lol, no after looking at the cii manuals i “passed” them all first time (apologies for the spelling mistake picky) not sure that your “typo’ing” is perfect either 🙂

    anyway def not past it are you? lol 🙂

  14. Sesame Member | 14 Aug 2012 11:38 am

    At least you’ve got a sense of humour unlike a couple of posters in this thread. You’re probably right about ‘typo’ing’ but two negatives make a plus. At least they do where R02 is concerned or should that be a minus? 🙂 I have to be honest looking at the cii manuals would make anyone want to lie down in a dark room but needs must or we’re out of the game. My HND in Economics counts for nothing but my CeMap got me 20 points. Go figure? I’ll be finalised by the end of September and at 57 it’s not that easy getting the old grey matter motivated to study information which not to put too fine a point on it won’t get used that often. Not bad though for someone at the lower end of the market?

  15. Well done if you get all your cii exams by sept and your HND, i passed my RO2 July 11 and think i’m still recovering from it – not easy – well it wasn’t for me- anyway must press on as we’ve got another £170 mil to do this yer .. oops there goes my typing again 🙂

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