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Smee calls for a grace period if network fails

Aifa director general Paul Smee is calling on the FSA to allow appointed representative a grace period if their network goes out of business.

Smee is concerned that when a network goes into administration its ARs could have a very short period of time to make fundamental decisions about the future of their businesses.

Smee believes that the regulator&#39s requirement for firms to be authorised can end up forcing them into making a decision, which could be a move to another network if their own goes under, quicker than they should. He says the FSA should be flexible and allow firms more time to find the best way forward for their businesses.

He believes this would help the firm do what is best for clients as well as for its staff and its business.

He points to the situation of Network 300, placed into administration last week, whose members have been offered a way to carry on trading by multi-distribution platform Thinc.

In September, IFA consolidator Destini moved in on the 100 registered individuals and 300-400 mortgage and protection brokers of stricken IFA and non-regulated network Lifeboat only a week after its collapse.

RIs are often forced to make decisions about their future very quickly if they want to keep their pipeline commission and continue trading.

Smee says: “The consolidation of networks and the fact that some networks have gone out of business, most recently Group 300, does mean that firms often have an extremely short timescale to make fundamental decisions about the future direction of their businesses.

“The regulator, which requires the firms to be authorised, should be flexible enough to give firms time to work out what is best for their clients, staff and businesses. An instant decision is not conducive to this.”

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