The chief executive of the network said members who do not maintain “quality of file” to show they followed the correct procedures remain an “enormous” concern for Tenet and have incurred significant costs to the firm, even though the majority of Tenet advisers do an “excellent job”.
Mr Greenwood said: “The concern is that processes followed cannot be clearly evidenced from the quality of files, and the FCA’s concern over conduct risk cannot be properly addressed.”
He said that this remained a huge concern for Tenet, claiming that the network has put much time and effort into addressing quality of file.
Mr Greenwood added: “It’s an enormous issue that comes with significant costs, but it is in everyone’s interest to get it right first time, every time.”
He said that ongoing threats to remove trail on pre-RDR business had the potential to “destabilise” the whole sector, saying consolidators who had snapped up businesses with this embedded value cannot simply transfer all the clients onto a new charging model.
He added: “This is because the income is made up of small items, which amount to a significant sum. There is nothing that prevents trail being stopped on pre-RDR business, and that should remain the same.”
Tenet will also grow its market share “organically” but will attempt to hit ambitious growth targets through more acquisitions if necessary, Mr Greenwood said. The firm is also undertaking a major IT investment programme that could take up to two years to complete.
Mark Hibbitt, director of Gloucestershire-based Sovereign IFA, said: “I actually think the bigger risk is posed by the Ombudsman and advisers have to consider the worst case scenario when writing business in an area which could potentially be the next mis-selling scandal. Advisers should consider whether they would be happy with certain projections if their files were passed onto the Ombudsman.”
According to its latest report and accounts:
Tenet posted a £300,000 profit for the last financial year.
Group revenue increases by 22 per cent to £118m.
Gross profit was up 7 per cent to £19.2m, with £1m in reported earnings.
Administrative expenses rose by over half a million to £18.25m, which included RDR training and the firm’s new Tenet Advantage system, as well as investment in research and compliance.
QCF level four adviser numbers grew by 5 per cent.