Openwork reports £8.5m loss for 2010

Openwork made a pre-tax loss of £8.5m in 2010, compared to a loss of £5.6m in 2009, its annual accounts reveal.

The network attributes its loss to increased spending on specific projects.

Its most expensive initiative was the Customer Benefit Programme, a three-year plan launched at the end of 2009 that aims to get its advisers ready for the Retail Distribution Review, on which £4.5m was spent in 2010.

The accounts say the firm is expected to continue to be loss making in 2011, due to ongoing economic challenges and costs associated with preparation for the RDR.

The results also show Openwork lost 425 advisers over the 12-month period, with adviser numbers falling from 2,485 in 2009 to 2,060 in 2010.

It says the decline is a result of both a general contraction in the number of advisers in the market, and the loss of advisers to a rival network set up by ex-Openwork chief executive Keith Carby – Caerus Wealth Group.

The results say: “The directors are confident that these seller losses have now been contained and seller numbers stabilised.”

In addition, the accounts reveal that the Financial Services Authority conducted a periodic assessment of Openwork in 2009 through the Advanced Risk Review Operations Framework reviews.

Following the results of the review, Openwork says it has undergone a review of the sales process and implemented a change programme for its appointed representatives.

The accounts say: “Until these reviews are completed there is a risk that matters will be identified which require further investigation and/or rectification costs, including potential redress.

“The company has not made provision in the financial statements for any potential administrative costs (other than the costs of the initial reviews) and further redress costs as in the opinion of the directors it is possible, but not probable, that further redress costs will arise from any further action that may be required by the company.”