‘Network’ may be tainted but AR model isn’t broken

Chris Smallwood

With claims the network model is bust after Sesame announced it is pulling out of the retail advice arena, 2plan’s Chris Smallwood launches a robust defence of the AR model...

With all the trouble it has had in the past few years, nobody has really been shocked by what happened to Sesame in the end.

That said, it can be difficult – especially for advisers – to prepare for such an upheaval. No adviser wants to have to bounce around the industry or to deal with the disruption that this inevitably brings.

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Keen to take advantage of this, the Sesame Bankhall Group has been brazen in its attempts to sweep ex-Sesame advisers under the Sesame Bankhall Group with the promise of a smooth transition if they become directly authorised.

SBG want to keep hold of as many advisers as it can by promoting this directly authorised route – even though it’s not necessarily in the best interest of those advisers.

You can understand why some advisers might be enticed down the directly authorised route. After all, ‘network’ has become something of a dirty word that advisers may not want to be associated with given the history of failures and a trail of disruption networks have left in their wake over recent years.

This lack of trust of networks and SBG’s promise of a ‘smooth transition’ might well tempt advisers to go DA.

But is going down the directly authorised really the answer? Can advisers or small firms with no internal regulatory function really expect themselves to keep up to speed with everything that’s coming out of Canary Wharf and amend procedures and documents accordingly. Can they really?

Yet, what’s the alternative, advisers may ask themselves? They relied on Sesame and they let them down – how would you know how to choose or trust another network?

Friends and colleagues that have become directly authorised and the blogs and comments underneath articles you read online say that it’s easy. No one bothers you.You can now do what you want. You can make your own decisions on solutions for clients and you don’t have to speak to India when files are failed or someone in the business prevention unit doesn’t agree with what you are trying to do. How glad you must be to get away from all that.

So what happens when things go a bit awry? You may well have believed those pension transfers were correct for the client and that you were following procedures – but at the end of the day no-one was really working on your behalf to ensure the file was complete and that the audit trail was there. So, when the third parties involved with project Minerva tried to join the dots, they couldn’t - and threw the file onto the mis-sale and redress pile. Oh dear.

I know you have trusted them to look after you and you have been let down badly – but is the AR/RI model broken, or was it just down to poor systems and controls? The latter, I would say.