Member productivity has increased at Sesame towards the end of the year, however, revenue at Misys' financial services division is still down 16% on last year because of continuing pressures, according to the firm's annual results.
Details of Misys’ annual report 2004 – published yesterday – reveal the financial services division has seen a lot of development over the last 12 months in preparation for the introduction of mortgage and general insurance regulations.
That said, the division’s operating results reveal the financial services division generated 16% less business than last year, dropping from £436m last year to £366m in 2004 and return on revenue fell from 8% to 7%.
“Revenues at £366m were £70m (16%) below last year due to the continued weakness in Sesame, our IFA network business. As anticipated last year, we have continued to see a reduction in the overall number of registered individuals (RIs) with the average number of RIs being 19% below last year,” says the financial statement.
“Conditions in the market for services to independent financial advisers (IFAs) have been difficult owing to a combination of weak demand for investment products, lack of regulatory clarity and rising costs of professional indemnity cover,” said Misys earlier in its statement.
“In terms of consumer demand, claims of product mis-selling, low interest, inflation and annuity rates as well as disappointing investment returns, have meant consumers remained wary of entering long-term financial commitments, with the exception of property purchases. A number of factors are, however, driving market growth and the IFA market has recently shown signs of improvement,” continues Misys Group.
The firm admits it would still like to spin off the Sesame division, as earlier proposed, but the “adverse conditions in the investment markets and uncertainty over the regulatory environment” has delayed its timetable for disposal of the IFA network services operation.
In the meantime, executives are concentrating on the development of Sesame’s multi-tie operation along with the expansion of member numbers in Misys’ general insurance and mortgage division and in its Sesame Direct division, where advisers are directly regulated by the FSA.IFAonline
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