Personal Touch Financial Services has written to 16 member firms today (Monday 30 September) to give them notice of termination of contract.
The 16 appointed rep firms, which are located across the UK, will be given three months’ - two months’ notice of intention and one month’s actual notice period, to help with novation to directly authorised status or to another network.
According to David Carrington, marketing director of PTFS, this move was part of the network’s five-year plan to reduce the number of members but improve the quality and professionalism of those remaining members.
Mr Carrington said he was not going to disclose the names of the mortgage and protection firms, as it was not PTFS’ intention to cause any disruption to their ongoing business and it was important to protect the needs of consumers during the transition.
All the clients belong to the individual firms.
He said: “We analysed firms across a range of criteria, such as the quality of files that they submit, how quickly they respond to requests for information, level of solvency, lapse rates - a lot of different factors.
“We did not base this on size or volumes of business; this was all about making sure that there was a proper strategic and cultural fit with the PTFS network.”
Over the past few years, the number of ARs has gone from 700 at the end of 2011 to just under 400, but Mr Carrington said the results showed the level of productivity had risen within that period.
“It has been a difficult decision to make but it was the right one. The majority of our clients are mass affluent, families with mortgages and savings and protection needs. This is our heartland and where we will continue to support clients.
“We want to continue our work in these areas and to build profitability servicing them.”
In addition to writing to the 16 firms, PTFS also wrote to existing members this morning to tell them of additional changes.
PTFS is taking over supervision to remove disproportionate cost on remaining firms. It is also seeking to give incentives to ARs to help recruit quality advisers into their businesses and to provide funding for training of new advisers for the first six months.
Additionally, PTFS is freezing its member fees “indefinitely”, Mr Carrington added.
Over the past two years, the network had increased its fees but Mr Carrington said “The cost of administrating firms that demanded higher resource is now going to be reduced. If you can continue to find efficiencies you can remove the additional cost from existing members.”