Your IndustryOct 30 2014

Sesame reviews restricted panel deals in wake of FCA fine

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Adviser network Sesame is reviewing all of its restricted panel arrangements with insurers in the wake of a fine handed down by the regulator today, parent company Sesame Bankhall Group’s executive chairman John Cowan has revealed.

Earlier today, the Financial Conduct Authority confirmed it had fined Sesame £1.6m, down from £2.3m due to “early settlement”, over ‘pay-for-play’ restricted panel deals which breached its inducements rules.

Mr Cowan admitted to FTAdviser that the team knew this day was coming, although it was not in the public domain, and that his team is having a good look at the deals within the restricted panel proposition to see how it fits with the rest of the business in the future.

He cautioned that the firm was tied to a degree by the fact that the arrangements are secured with long-term “legal contracts” that it “can’t just tear up” and added that many may remain suitable as they are with “insurers with a very respectable pedigree”.

Mr Cowan explained: “There are legal contracts with insurance providers, so we can’t just tear them up and do something different.

“We want to have a measured look at this thing and see if it’s fit for purpose and appropriate, clearly there were influences there, but nonetheless we’re talking about a panel of insurers with a very respectable pedigree that our advisers can use.”

Mr Cowan noted he was appointed by the group’s owners Friends Life in January to lead Sesame forward in a “clear and transparent” way, bringing a new leadership team and building a sustainable business model.

As an example of the way the firm was changing, Mr Cowan described changes at the Sesame conference this year that saw it refuse provider sponsorship. He said a culture of behaviour that is no longer acceptable under revised rules had previously been “custom in the marketplace”.

“In previous years you would have asked product providers to sponsor tables or make some sort of contribution to that conference... One of the first things that we did when I took over was to pay for it ourselves, every penny of it.”

As for the challenge that the fines and loss of face have caused on the bottom line, Mr Cowan said that clearly the firm has lost income, “and we’ve of course now got a fine of just under £1.6m, so of course it’s pain we’ll have to suffer, but we’ll deal with it”.

He continued: “I’d like to know if Sesame is the only business that’s been singled out for this activity, it will be interesting to see if that’s the case.

“My regret is that the business didn’t read the signals, otherwise we wouldn’t have had a fine.”

peter.walker@ft.com

Additional reporting by Ashley Wassall