In its first Retail Condust Risk Outlook, published yesterday, the FSA said it had identified problems with the level of control and oversight networks exert over their appointed representatives (ARs).

Kelly says business owners must safeguard their livelihoods by satisfying themselves their existing network is “stable and capable of providing high quality support”.

Five key indicators of the health of a network:

Financial strength: Can the network demonstrate a track record of profitability and strong financial governance?

Capital resources: Going beyond capital adequacy as mandated by the regulator, does the network have liquid assets to commit to the business long term?

Ongoing investment: Are funds being made available to enhance the infrastructure and service to network members, in turn helping them create value in their own businesses?

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Management expertise: Is there an experienced and committed senior management team, providing continuity and a long-term vision?

Support of a strong parent: Is there a clear strategic intent to help the business succeed?

Kelly says: “Advisers need to be aware of the warning signs and satisfy themselves on issues such as financial security, depth of resource, clarity in strategy and regulatory integrity.

“Whilst the regulator recognises that a number of networks are under considerable strain, others are in better shape.

“Before any more firms fail and withdraw from the market altogether – leaving their advisers high and dry – it is essential that practice principals have confidence in the ongoing viability of their network.

“The impact on advisers and their businesses can be terminal when their network itself fails and the regulator is providing a stark warning that it expects more networks to struggle with the transition to the post RDR world.”