Sesame CEO says FSA rules limit business models
George Higginson, chief executive of Sesame Bankhall Group, said regulatory requirements may mean that it isn’t practical for individual advisers to operate as both independent and restricted.
Sesame Bankhall views the new FSA rules as opening up more options for advisers but Mr Higginson said it wasn’t practical for individual advisers to do take up all the possible models.
The intermediary business said while the RDR rules do allow individual advisers to operate as both independent and restricted due to the challenges of demonstrating compliance and the need for transparency it was unlikely that these options would be taken.
However Mr Higginson said adviser firms may choose to be both independent and restricted, selecting different advisers within the firm to offer one type of advice or the other.
In FTAdviser’s Guide to independent vs restricted, Mr Higginson said: “In the RDR world we are likely to see the emergence of these ‘hybrid’ business models.
“An adviser firm cannot call itself independent if one or more advisers within the firm are restricted: for example, if JD Independent Financial Advisers had six advisers and one of the advisers intended to be restricted post-2012 the firm would have to change its name, for example, to JD Wealth Management.
“However, whilst a ‘hybrid’ firm can’t have ‘independent’ in their firm’s name, any individual advisers working for the firm and offering independent advice can describe themselves as independent, for example, on their business stationery.”