For years the network propaganda machines have always played down the fact that the clients (or client files) of member firms are actually ultimately owned by the network itself. Although this fact is always conveniently remembered when a member firm tries to leave the network, suddenly the files are required to be returned!
Member firms are never any more that ARs. But as the FSA starts to enforce the TCF regime there are several potential problems for networks as a result of this over-riding agency issue. Historically, all networks have seen a turnover of membership, for whatever reason. With this turnover, through death of the proprietor, merger, retirement or resignation, comes an increasing amount of unallocated commissions which are received by the network and ultimately retained by the network because they cannot be allocated to a specific member firm. Effectively these are transactional custom...
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