The fact that you had no control over this outcome would be a bitter pill to swallow.
This is the position that the appointed representatives of Network Data found themselves in last week.
I hope these ARs are not required to repay indemnity commission and development finance received in a lump sum before they are allowed to join other networks or become directly authorised.
This was the position in the past when in 1992 Oaklife Assurance, a small Hertfordshire life insurer, was prevented from accepting new business by the Department of Trade and Industry and the Life Assurance Unit Trust Regulatory Organisation (which first became the Personal Investment Authority and then became the FSA).
It will be interesting to see if these ARs will suffer the same fate as those ARs 17 years ago who were under the precursor to the current regulatory framework.
Let’s hope that in this period of rising unemployment Network Data does not suffer the same fate as Oaklife. That firm was wound up by the then secretary of trade in the hope of giving those who ran their businesses a chance.
When these things happen, firms need deep pockets to meet tax liabilities, other business costs, redundancies and legal expenses as these matters have a way of dragging on.
Many ARs joined networks and are still doing so because of the demands and pressures of regulation. There is also a high cost, as a result of fees, that goes along with being DA.
I’m not against regulation. What I’m against is the iron fist being applied to those in the front line.
The fact is that many have been priced out of the industry. People are no longer queuing up to join and the FSA has effectively been immunised from paying damages to firms that are impacted by its actions. The only way it can be challenged is by a judicial review.
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