Personal Touch said the move was part of its five-year plan to create a smaller, higher quality advice network with a focus on consumer outcomes and professional standards.
The network emailed 18 registered individuals this morning at 9.30, which it said would be followed up with formal letters due to arrive tomorrow in a bid to avoid ‘speculation.’
All advisers would also receive a follow up phone call from Personal Touch, it said.
Each adviser firm had been assessed and for a variety of reasons in each case were no longer a ‘cultural or strategic fit’ said David Carrington, marketing director of Personal Touch.
However, Carrington said despite the fact the vast majority of those expelled were sole traders, volume was not one of the characteristics assessed. Examples of qualities examined included file quality, levels of engagement with the network and business solvency.
However, talking to Mortgage Solutions in December 2012, Personal Touch CEO Max Wright (pictured) said weeding out the ‘mortgage dabblers’ remained his biggest challenge since starting as boss of one of the biggest UK mortgage networks.
The network called its strategy a period of planned, natural attrition with member firm numbers deliberately reduced from over 700 at the end of 2011 to just under 400.
Carrington added: “We realise that the news will impact on those firms given notice and we are keen to ensure that we provide as much help and support as possible to everyone affected by this decision.”
He said this gave them a three month notice period, over and above the one-month contractural obligation, which places them in a formal notice period from 29th November.
Carrington said: “In the meantime these firms may continue to write business on the same terms and commission payments will continue to be paid subject to the standard terms of their Appointed Representative Agreements. We have experts in novation and FCA regulation who will provide each firm with help to minimise any disruption both to their own business continuity and to their clients.
Other strategic changes made by the network over 2012 include a new fee structure for member firms, the appointment of a new executive team and staff realignment – all of which were designed to reduce costs whilst increasing the focus on providing good consumer outcomes, said the network.
Max Wright, CEO, said: “Our business strategy is indeed a bold one and for an industry traditionally obsessed with number-counting and distribution volumes it may appear very radical, but even in the past 18 months we have already started to see the positive impact with improved productivity and turnover.”
“I am particularly proud of our staff and members and the fact that we are one of only a small number of networks with a robust financial position who has ended the past year in profit.”
In its annual report out in mid-September, the network reported registered individual numbers had fallen 22% from 1,492 to 1,161 by the end of 2012 and have evidently fallen further still.
At the time, chief executive Max Wright said he had overseen a ‘relentless drive’ to promote quality advisers over the traditional focus on quantity ahead of the new Mortgage Market Review regulatory regime.
Personal Touch’s pre-tax profits fell to £0.4m for last year, down from £1.2m in 2011 after a period of investment, although annual turnover for the year grew 15.7% to £64.9m, compared to a 6.3% fall the previous year to £56.1m.
However annual average productivity per adviser rose from £38,000 in 2011 to £44,000 in 2012.
