With up to 900 Honister Capital advisers looking for a new home, what hurdles do they face, and how is the FSA dealing with the situation?
Honister Capital’s failure to secure professional indemnity insurance earlier this month – and its subsequent fall into administration – has left as many as 900 advisers out of a job.
For many, the race to be re-authorised has already begun. But what are the advisers’ options, how large are any hurdles in their way and how well is the Financial Services Authority (FSA) dealing with the process?
The regulator has indicated it will not fast-track Honister advisers or provide them with any concessions. Speculation concerning how long it may take to re-authorise them differs depending on what they want to do: five days if they want to join another network, six months if they are eying direct authorisation.
Back in the saddle
Weigh up the options
The first step for advisers is to decide which route to take, and many, like James Robson at Credus Consulting, are weighing up their options. Like his colleagues, Robson could choose to become an appointed representative (AR) of another network or company, a directly authorised (DA) individual working for a firm, or a DA sole trader.
He said: “I am reluctant to join a new network – because if the third biggest in the country can pull the plug, surely others can too. We are deciding between going DA or joining a DA firm – this requires authorisation on an individual level.”
The DA option is likely to take several months because, as the individual will be responsible for his or her company’s compliance, the FSA must conduct an assessment of suitability.
Once an adviser has decided on a route, those looking to become DA must begin by paying a one-off non-refundable fee towards the costs of processing the application. If the claim is straightforward, it will cost £1,500, while moderately complex and complex claims can cost as much as £5,000 and £25,000 respectively.
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