Wealth manager Harwood has placed a subsidiary, appointed rep adviser firm Network Direct, into voluntary administration due to “weak investment markets” and rising Professional Indemnity insurance costs.
Harwood said depressed investment business and the soaring costs of PI made Network Direct unviable - although there are hopes that many of the advisers will be taken on by another firm, ASHL.
The failure of the firm is one of the first directly linked to the soaring cost of PI insurance after warnings from the Personal Finance Society and other critics that the cost and poor availability of PI would lead to some firms struggling to continue in business.
In a statement last night Harwood confirmed that Lyncombe Consultants Limited (Lyncombe), part of Adviser Services Holdings Limited (ASHL), is acquiring the “business and part of the assets of Network Direct Limited (NDL) out of administration.”
Harwood added: “We are pleased to have agreed this deal with ASHL, ensuring that the advisers and their clients can continue their successful relationships going forward. This does not impact the rest of the Harwood Group.
“NDL was placed into administration on 23 November due to the impact of a combination of the continued weakness in investment markets, together with the ever-mounting cost of securing PI insurance.”
Harwood was itself taken over by global private equity firm Carlyle earlier this year.
Despite the collapse there was hopeful news for the Network Direct advisers who may be taken on by an expanding firm Adviser Services Holdings Limited (ASHL).
ASHL says it has acquired the “future trade” of Network Direct Ltd (NDL) to provide advisers, staff and clients with some continuity. This will include income novation support and re-authorisation. The amount ASHL has paid for the acquisition has not been disclosed.
It is also not yet known how many of the Network Direct advisers will be able to transfer across but it is expected to be a substantial number.
New owner ASHL has been expanding in recent months and in September bought the Sense IFA Network for £9.35m. It also acquired Lyncombe Consultants.
Network Direct was launched in 201 as a “new style network model.” It operated a team of about 100 AR (appointed representatives). Despite being appointed reps the advisers were not forced to use panels or restrictive models and were ‘whole of market.’
Adviser Services Holdings Limited (ASHL) is a new privately-owned business based in Tewkesbury and was launched last year to build a presence in the advisory market and offer services to financial advisers.
ASHL’s team include CEO Michael Couzens, Andy Ferns and Stuart Cresswell, Leanne Williams, Jason Kirk and non-executive director Rory Percival, an ex-FCA regulator.
Mr Couzens said: “The fact that Harwood have chosen to place NDL into administration is not a reflection on the quality or professionalism of the advisers and staff. We believe NDL is full of highly professional advisers who want to provide an excellent service to clients.
“ASHL have a vastly experienced and successful leadership team who have worked with independent advisers in networks over many years. We created ASHL because we felt there was a need for a more personal, hands-on network where advisers were simply more than cogs in a wheel.
“Because we are network-focused and with our history, we are a natural home for professional, independent advisers. We’re delighted that the ASHL network community is to be joined by NDL advisers and we can assure them and their clients, that we will do everything we can to quickly facilitate their transition.”