Personal Touch Financial Services suffered a 65 per cent dip in profits in 2012 despite seeing its turnover increase by 15.6 per cent.
The network’s accounts, published today, show it posted a pre-tax profit of £399,431 for the year ending 31 December 2012, compared with a £1.1m profit the years before. However, PTFS boosted turnover from £56.1m in 2011 to £64.9m in 2012.
PTFS chief executive Max Wright says the fall in profits was due to preparations for the Retail Distribution Review and Mortgage Market Review.
Speaking to Mortgage Strategy, Wright says: “We were spending what we were making to make sure we were offering the right service for the member and the customer [post RDR and MMR].”
The results also reveal Lloyds Development Capital, the main shareholder in PTFS’ parent firm, Personal Touch Holdings, injected £12.6m in capital at the back end of 2012. As a result, the network had cash reserves of £16.2m at the end of December, up from £2.3m a year earlier.
Wright says this money will be used to invest in technology, particularly Toolbox, its back-office administration system.
He says: “What we agreed [with LDC] was that we wanted to make sure the business was well capitalised so that it could deploy that strategy and take advantage of things we thought that we going to happen in the next three to five years.”
During 2012, PTFS undertook a review of the company’s strategy and it publicly stated it was looking to shed “dabblers”, meaning advisers who are not writing much business.
As a result of the restructure, appointed representative numbers fell 21 per cent from 733 at the end of 2011 to 576 at the end of 2012. The number of registered individuals within the network fell from 1,492 to 1,161 over the same period.
While AR and RI numbers fell, the annual average “productivity” of advisers increased from £38,000 in 2011 to £44,000 in 2012.
PTFS had £10.7m set aside for liabilities at the end of 2012. This is broken down as £9.5m as a clawback provision, £630,768 to deal with complaints and £618,688 for lease provisions. At the end of 2011, the provisions balance stood at £9.6m.