Incoming regulations could see network members 'disappearing' from the Financial Conduct Authority's register, raising the risk clients will be left confused about the right of their adviser to practise.
From next year the senior managers regime will apply to all firms in the financial services sector – including advisers.
The rules were introduced for banks last year to ensure individual accountability and raise standards of governance, and set out a series of senior management functions which come with relevant responsibilities.
Each firm must appoint someone to carry out each senior function and inform the FCA who it is.
But when it comes into effect, only senior managers will be listed on the Financial Conduct Authority’s register.
This has raised concerns about how networks will be affected, with the prospect that their members might not be listed at all if their network becomes their “senior manager”, on the grounds that it does its members' compliance.
Mike O’Brien, regulatory director at Tenet, said this was a concern for the network.
He said: “Whilst the argument may be different for large banks and insurers, the register should be a reliable source that a consumer can go to in order to validate that they are dealing with an individual or a firm that has been vetted by a regulator and on an ongoing basis.
“It is claimed that consumers do not check the register and therefore it serves no real purpose.
“The answer is not to abandon the register but to make sure the public are aware of its purpose and where to find it otherwise it opens the doors to unscrupulous scammers and even more FSCS levies.
“Many firms in our space are sole traders and/or have very few employees.
“It is not going to be practical to replicate the senior managers and certification regime (SMRC) applied to banks in the SME space and the FCA accepts that it will need to be proportionate in its application and Tenet will play an active role in helping to define what that may look like.”
John Cowan, executive chairman of Sesame Bankhall Group, said he favoured senior managers being appointed within each individual firm.
He said: "Although networks are responsible for the regulated activities of their appointed representatives, it would appear to be contradictory to the aims of the SMCR to remove approved persons functions entirely from individuals who are business owners of firms that are separate legal entities from the network itself.
"Such a regime would not accurately reflect the dynamics of the relationship between an appointed representative and its principal, which is one of businesses working together to ensure good customer outcomes."
He added that the register was a "valuable tool" for consumers and regulated firms.
A spokeswoman for the FCA said it was too early to comment on this issue.
The concerns expressed by Tenet reflect what happened to advisers who worked for banks and large financial institutions, which complied with the regime as it was applied to those firms in March 2016.
