Sesame will no longer be “an appropriate home” for advisers who deal with non-mainstream investment areas as it carries too much risk, Sesame Bankhall Group’s managing director has said.
At the Sesame Symposium, held today (28 January), Stephen Gazard, said it will become increasingly difficult for a large business which supports thousands of different business models to support all the various potential independent investment propositions, “particularly those that include the ability to advise on non-mainstream investments”.
He said: “We certainly concluded that the potential future cost base required to deliver the appropriate systems and controls environment would not be acceptable to us, you and ultimately the consumer.”
Mr Gazard said the group concluded that supporting non-mainstream investments, such as agricultural property investments, traded life policies and experienced investor schemes, is “unsustainable” for the group.
He said: “And we firmly believe others will conclude the same in time.
“We have analysed the number of cases that the removal of non-mainstream investments would actually affect and based on Sesame data for business transacted by you over the last 12 months we are talking about 32 cases. That’s right, 32 cases out of over 225,000 across all our members.
“The reality is that it is not a relevant requirement for the vast majority. We need to be realistic. Higher risk products increase the likelihood of recompense, so why would we expose ourselves, you and the consumer to these areas?
“If offering non-mainstream investments is truly fundamental to your business then we sadly acknowledge that Sesame will no longer be an appropriate home for you.”
In addition to Sesame’s current restricted proposition, it has launched a new proposition that will be a very broad-based solution for investments and pensions, generally using the same approved panels that members’ use today.
Mr Gazard said Sesame’s new ‘universal’ proposition “looks very similar” to the way advisers operated in the pre-RDR world, expect advisers cannot advise on non-mainstream investments.
Mortgage and protection advisers in the Sesame network can continue to offer the same independent/whole of market service they do today.
He said: “However, the reality is that in this post RDR world that small but significant change, which reduces the risk to all involved, moves us from an independent label to one of restricted. It’s that simple.
“The breadth of providers and investment houses you continue to have access to going forward under our new Universal proposition remains unchanged, and I hope this helps to reassure you.
“We all acknowledge that the term restricted is unhelpful to say the least and covers a very broad church of potential models. Even the FCA, as recently as a few weeks ago, acknowledged there is a lack of clarity and that more work needs to be done in this area.
“But the regulator has also been very clear that they are seeking a world where clients are paying for advice. The products and providers are merely a vehicle in the execution of that advice.
“It is not about the products it is about delivering a robust and repeatable process tailored to individual client’s needs.”
Sesame Bankhall Group last year (6 November) confirmed market speculation that the Sesame network planned to remove the option for authorised representatives to be independent, and revealed plans for a second restricted proposition alongside its panel-based option.
