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Standard Life loans bankrolling adviser acquisitions

Standard Life has confirmed that it has been offering loans to independent financial advisers to assist with their growth and acquisitions of other firms.

Barry O’Dwyer, Standard Life’s managing director for adviser and workplace, said that post-Retail Distribution Review an increasing number of IFA business owners are starting to look at ways to build through inorganic growth.

“As a key partner to a large number of advisory businesses, we have naturally been involved in discussions about how we might support firms with their business plans. We have provided funding on commercial terms to a small number of firms as part of this wider support programme.”

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The details of loan amounts and number of firms were not given, but the firm stated the initiative has not been restricted to wrap advisers and lending decisions are not predicated on any future business or asset flows to Standard Life.

Adviser reaction to the practice was mixed, with some raising issues over potential conflicts of interest and others stating it is a natural consequence of reduced lending on the part of traditional lenders such as banks.

Daren O’Brien, director at London-based Aurora Financial Solutions, whose firm has not borrowed from the insurer, said it might pose issues for an independent advice business in particular to align in this way with a product provider.

He also questioned how such loans would be perceived in the wake of the inducements guidance issued by the FCA in January, even where there is no element within the terms of any agreement relating to distribution.

Adrian Murphy, partner at Glasgow-based Murphy Wealth, told FTAdviser that while they have not been approached either, he can understand why firms would seek such arrangements, as in the current climate it is difficult to borrow via traditional methods.

“It does definitely raise the question of a conflict of interest and difficulties around where you place business,” he added.