The Financial Services Compensation Scheme (FSCS) is dealing with over 300 complaints against advisers who were in collapsed IFA group Honister Capital.
Honister administrators Grant Thornton has also rubber stamped the sale of ex-Honister advisers’ trail commission to corporate advice firm MacRobins.
In a note seen by New Model Adviser® Grant Thornton said that since it had been appointed administrator last year it had received 112 complaints against Honister advisers, which were not covered by professional indemnity (PI) insurers and so were being dealt with by the FSCS.
It said prior to Honister’s collapse it had 192 outstanding complaints. It said the PI insurer was disputing whether it would cover these claims and so they too were being dealt with by the FSCS.
This resulted in outcry from advisers who claimed they, and not the networks to which they belonged, owned the trail.
In the note published today Grant Thornton said it now had definitive legal advice that the commission was the group’s asset and not the individual adviser's, and so has released the commission, which had previously been held on trust awaiting legal advice, to MacRobins.
Grant Thornton had offered advisers in the Honister networks, Sage Financial, Burns Anderson, and Honister Partners, the chance to bulk novate a percentage of trail commission.
The percentage advisers had to give away varied depending on which network they belonged to. Burns Anderson advisers were the worst hit, having to sacrifice 50% of recurring annual commission.
Grant Thornton said 216 of the group’s advisers, or 36%, had taken up the offer.
Grant Thornton has revealed its time costs as administrators since its appointment in July 2012 is £225,000 with expenses of £3,000. The company also spent £98,000 on correspondence with creditors, discussions with the FSCS and new client claimants. Legal fees have also resulted in costs of £69,000.
Willis Owen is set to pay £93,000 for Honister Capital’s losses after it made a deal with Grant Thornton to surrender losses incurred by the group for the period ended 30 September 2010.
The update also revealed that Grant Thornton is investigating the group’s tax position to establish whether any of the companies can make terminal loss relief claims which could result in an estimated £198,000 in corporation tax repayments.
Grant Thornton has also revealed the breakdown of claims that each company belonging to the Honister Capital group received.
At the administrator’s appointment out of the 192 outstanding claims on the group, Burns Anderson had 118 claims, Sage Financial Services had 54 and Honister Partners had 19.
Since Grant Thornton’s appointment to date, there has been a further 112 claims across the group with 49 belonging to Burns Anderson, 30 to Sage Financial and 28 to Honister Partners.
Grant Thornton said it is also investigating currently six unknown claims .