Honister commission buyer warns against bulk transfers
MacRobins says there are “legal considerations” as well as practical concerns over incorrect allocations.
MacRobins Ltd, the corporate IFA firm that last month purchased the commission stream of collapsed network Honister, has issued a warning to product providers over their attempts to facilitate bulk transfers for former advisers.
In a statement, the firm said that it, along with Honister’s administrator Grant Thornton, had been in correspondence with product providers to explain the “legal considerations” of such a move, which involves issuing a termination order and then transferring sub-agencies once advisers are re-authorised.
It added that there are also “practical considerations” that many providers have not taken into account, including the potential for agencies to be transferred to the wrong adviser or firm where decisions are taken without recourse to Honister’s back office system.
MacRobins also said that a transfer of the agency is likely to “cause a breach of a restriction, obligation or duty owed to Honister by the AR [authorised representative firm] concerned”.
The statement goes on to say that, given the issues outlined, MacRobins and the administrators “hope” those providers that have issued termination notices will “reconsider their position, rescind the notices and agree to support us in the equitable transfer of the agencies to AR’s”.
This ‘equitable transfer’ involves former Honister advisers purchasing paying a percentage of income accrued over the past 12 months as an upfront fee to novate commissions, with rates set according to which arm of the business the adviser worked for.
Burns Anderson Ltd advisers will have to pay 53 per cent of commission income earned over the 12 months to 30 June 2012, while Sage Financial and Honister Partners advisers will have to pay 20 per cent and 3 per cent respectively.
Last week, Fidelity become the latest to confirm it will accept bulk transfers of clients if necessary. A number of other firms have also said they would accept bulk transfers, including Aegon, Aviva, Skandia and Standard Life.