We all know there are two ways for your business to be authorised; directly to the FCA or via Appointed Representative status, usually through a network.

I’ll save the direct authorisation v network debate for another day. Frankly, it can be a tedious discussion with no binary answers, only the right one for your business. That’s why we are agnostic, offering both options to our partners.

But, following recent experiences, and an excellent piece in New Model Adviser, I do want to talk about the issues advisers and planners should think about before they move network. And offer a checklist of questions to consider before you hand in your notice.

You will be able to answer many of these questions by dusting off the contract you signed when you joined the network.

It may also be useful to talk to advisers who have recently left; they can easily be located on the FCA Register and will provide valuable insight into the practicalities of leaving.

1. What’s your notice period?

Typically between one and three months, the notice period, and what happens after you hand it in, dictates the whole timetable of your move.

Make sure you check when that notice really kicks in. Is there a clause on file checking? Some advisers find that they can’t leave until a certain number of file checks have been carried out. It isn’t over-cynical to presume that those checks aren’t a priority for a ceding network.

2. What happens to payments due to you?

Moving networks will almost certainly cause a period of disruption, potentially affecting your cashflow.

You need to understand what will happen to payments due to you after you’ve handed in your notice:

• Will these continue to you as normal?
• Will they cease until any potential clawback liability has been moved away?
• Will payments stop completely?

Once you have the answers you can take appropriate action.

3. Will they allow bulk transfer / novation?

The days of being able to simply novate your existing clients, and the accompanying ongoing fees, are over. Life is now much more complex.

You need to understand the requirements of your existing network, your new home, the providers and, of course, the FCA.

If you have a potential clawback liability, relating to protection contracts, it’s usual for your current network to ask for that to be novated to your new home, assuming they will accept it. An alternative would be for a sum of money to be left behind to cover future, potential, clawback. That’s the reason some networks will cease payments to you on receiving your notice.

4. Will you continue to pay fees?

It’s fair to assume you will continue to pay fees to your current network during your notice period.

But, will there be any other costs associated with leaving? Your current Network may want a contribution to your PI insurance for the year and possibly regulatory fees too, which are paid in arrears.

5. Will you need to buy ‘run off’ PI insurance?

Your PI insurance with your current network will cease when you leave. Both your existing, and new network, may therefore require run off PI insurance to be put in place to cover previous liabilities.

Of course, this may not be the case, but it’s important to know what the situation is and any associated costs.

6. Will they allow access to data?

Over the years with your current network, you will have built up a significant amount of data on their back office system. This data is crucial to your business. For most advisers, the thought of building it from scratch is unthinkable.

You therefore need to know, as a minimum:

• What access will you have to that data?
• Will your current network allow a data transfer? If so, who will meet the costs and what are the regulatory requirements?
• What happens to your paper files?

7. Are there any nasty non-solicitation clauses?

I’ve spoken with advisers who, after reading their current Appointed Representative and Registered Individual contracts, found nasty, and long-forgotten, non-solicitation clauses.

Ongoing access to your clients is fundamental to every adviser. Even if you think you know the answer, check your contract, just to make sure there are no surprises.

8. Will they allow a period of dual authorisation?

Most advisers fear a period of downtime when moving between networks.

It isn’t always easy to arrange for deauthorisation and reauthorisation on the same day. The simplest way to avoid the possibility of downtime is to get both your current and new network to agree to a short period of dual authorisation.

9. What are their client communication requirements?

Your clients will need to be told about your change in network. However, it’s important to know what the expectations and requirements of your current network are, along with those of your new network and the regulator.

Plenty more to think about

Of course, these questions are just half the story. There’s a similar list relating to alternative networks before you make your final choice, but that’s another blog, for another day.

In the meantime, I hope you found this useful, and, of course, if you are thinking of moving networks, feel free to contact me on 01959 567 000.