From a regulatory point of view, a network would be naive at best to suggest it has no influence over its ARs in terms of Treating Customers Fairly and compliance with Financial Services Authority principles – it carries the bulk of the liability.
But what about its influence over the commercial decisions advisers make? This can include the number of suppliers on its panel and the volume of business submitted to them.
An example of this is where a network has its own packager and its ARs are denied access to others. This controls how advisers place business.
Another example is where there is only one general insurance provider or where the panel of life companies is limited, or even where research tools favour certain firms because of the products.
This is not often seen as overt control – especially by the network exercising it – but it influences advisers’ decisions and choices. In fact, any restriction has a huge influence on client placement.
Recently I was discussing our proposition with a prospective member and it said we had been short listed alongside another network.
The director of this firm highlighted some of the benefits of joining the other network, the first being a substantial golden handshake. The firm would be tied in for three years. I said that if a network is providing upfront money it would want to tie a firm in for several years.
The other benefit was the commission paid from one protection firm. I asked a blunt question – is the premium to customers loaded? Yes, was the answer, but you are only expected to do 85% of your business with that company.
When questioned about whether it considered this in line with TCF, the response was twofold. First, the customer would never know how the loaded premiums compared with unloaded ones and second, it must be TCF if the network is asking us to sell it.
Coming back to the question of whether networks influence their agents, clearly they do. But from an adviser’s perspective, could this damage their proposition to customers? If I was an adviser and was asked to sell loaded premium policies, be restricted to one packager and even be locked into a network for several years, I’d feel uneasy.