First 4 Brokers ARs face ruin due to unpaid fees

Appointed representatives of failed network First 4 Brokers could face financial ruin because of unpaid fees.

The network went into administration on August 11 leaving 30 ARs unable to trade and hundreds of support staff redundant.

Robert Ambrose, a broker at In-Sight Finance, has attacked the Financial Services Authority for failing to protect ARs and control the network.

He says: “The FSA audited First 4 Brokers less than six months ago. It allowed them to carry on trading. No capital adequacy check and no safeguard that ARs’ commissions were not being used to fund wages.

“I was an AR of the network and now cannot trade. I have lost all sign of future income, have clients I have known for years that I can’t help and wonder what the point is of continuing with my business.”

He adds: “The FSA has our full working history but won’t provide a temporary compliance solution, won’t fast-track our new network application and won’t safeguard our commission payments.”

Another AR of First 4 Brokers says she could be owed as much as 20,000 by the network.

She says: “Lenders and packagers are holding onto our fees because they have not been told by the administrator that they have to pay them to us. The fees for cases we have already completed have gone into an account at First 4 Brokers and will now go towards paying the network’s debts. We are left without wages.”

A spokesman for the FSA says: “We deal with situations like this as quickly as possible. ARs and networks have a commercial relationship. We have no responsibility to get involved in that. ARs should be aware of what is in their contracts.”

Meanwhile Lee Birkett, chief executive officer at Prestbury, has revealed that it offered to buy out First 4 Brokers just weeks before the network went into administration.

He says: “I did not hear back from First 4 Brokers which is sad as the duty of the managing director should be to realise the benefits of consolidation.”

Mark Bowen, administrator at insolvency firm Moore Stephens, says: “The ARs will have to find a new home. Several networks have contacted the ARs directly but this is a matter for the firms themselves.”