In a debate at the CML conference in London, industry heads agreed that some vulnerable distributors are at risk and that the market would continue to move towards fewer, bigger firms.
Ian Andrew, managing director of intermediary sales at Nationwide, warned that rather than struggling networks being bought out by larger firms, the market will now see more networks being allowed to collapse.
“I think the consolidation will be letting smaller, weaker firms go under and then others picking off the best advisers.
“To some extent we already see that happening now. I’m not convinced we’ll see a lot of money flying around between distributors so I think it will be a case of letting some fail and then picking up the best advisers.”
Stephen Smith, director of housing at Legal & General, added: “Obviously when you take over a firm you take on its liabilities as well as its assets so you’d rather take the best advisers or the best adviser firms within a network.”
Smith went on to say that brokers would always want to be a part of a larger network to give themselves stability.
“There is certainly a move towards larger firms who have a demonstrable capability for compliance management as well as sales management.
“That’s because intermediaries want to sleep at night and know there’s not going to be a knock at the door or that their commission is not going to be paid. As a result I think we will see further consolidation in this market.”