According to a significant chunk of the adviser community, the regulator wants fewer, larger businesses.
Using parlance usually reserved for conspiracy theorists, they say fewer regulated firms “are easier to regulate, easier to keep an eye on”.
This is, of course, something the FSA would never admit to. In fact, it flat denies it.
The consolidation of Britain’s independent financial advisers is gathering pace.
Back in 2002, Aegon bought Momentum Financial Services, at the time one of Britain’s largest IFAs with 230 staff and nine offices. It was Aegon’s third purchase of an IFA in two months.
A total of five Aegon-owned IFA businesses were merged to form Origen and the Dutch insurer has since gone on acquire a 100% stake in Positive Solutions.
Openwork itself is quarter owned, via ordinary shares, by Zurich Financial Services.
Last summer saw the biggest merger of advisory businesses to date in the UK.
Network giant Sesame acquired support services provider Bankhall to create Sesame Bankhall Group. The company is now home to some 3,000 advisers and 1,500 directly regulated businesses.
Chris Smallwood, CEO of 2plan Wealth Management, says the deal with Openwork provides further evidence the industry will consolidate in the run up to 2013 as firms seek to secure their survival.
“This deal will not be the last involving two large companies getting together,” he says. “A lot of advisers in the directly-authorised space, including the one-man bands, will look to move to the larger distribution groups.”
Keith Richards, distribution development director at Tenet, says moves to consolidate have been exacerbated by the dire economnic conditions over the past two years.
“Openwork always said it wanted an IFA arm and this is just further evidence of consolidation in our industry. What it means, ultimately, is less choice for consumers, but we must remember consolidation is not necessarily a bad thing.”
While the FSA would not admit to preferring fewer businesses to regulate, with some tens of thousands of firms under its regulatory radar, it would be no surprise if it did consider the Openwork deal as a positive step.
