The heads of the four firms have all served notice to quit Tenet after the network introduced a new mandatory IT system, Intelligent Office (IO), in September without giving them sufficient time to prepare for the change.
Three of the firms are facing bills of more than £40,000 each.
Mortgage Solutions has also seen a letter, dated 26 June, sent to the board of Tenet signed by 35 adviser firms asking for a more gradual introduction of the “underdeveloped” Intelligent Office system. In the letter, advisers say the introduction of IO is “ill-planned”, “operationally and financially damaging”, and an “increased financial burden”.
Mortgage Solutions spoke to four firms who have handed in their notice because of the introduction of IO. They asked for anonymity because they feared Tenet would terminate their authorisations before they had made alternative plans for their businesses. A termination acts as a black mark on a broker’s compliance record.
Less than four months to prepare
The rapid introduction of a new IT system Intelligent Office, that went live on 25 September, is behind the turmoil at the network.
Before Intelligent Office was brought in, brokers could use their own customer relationship management (CRM) systems, which many Tenet Lime members say was the network’s unique selling point.
However, in February this year Tenet Lime announced it had signed a five-year contract to use Intelliflo’s Intelligent Office system. Brokers say they were not told the system was compulsory until 31 May giving them just under four months to prepare their businesses for the change.
One sole trader, who resigned in June, said: “When I heard about the new IT in March we assumed it was just for registering the new business we had written so we could get paid. When brokers asked a Tenet representative at an event in Bristol if it was compulsory, they were told no. Not long after, that no became a yes.”
Another mortgage director said the communication that the system was mandatory was “hidden in a note” sent to members.
The director, who has just paid Tenet more than £40,000 to leave the network, said: “It is the single most catastrophic debacle that I have come across in the ten years I have been a member at Tenet.
“We joined Tenet because we could use our own CRM system and it has always worked well for us. When I heard they were making IO mandatory I told them I will not be adopting it. It has not been piloted. You do not roll out a system without 12 months of proper testing. We were given no time to test it, migrate clients or decide if we wanted to leave.
“I have 5,000 clients on my back office system. If I stay I would have to keep my system and pay for IO and then pay someone to double key onto both.”
Extended processing times
When the former chief executive Martin Greenwood announced the contract with Intelliflo, he said it would help advisers become more efficient and their businesses would become more profitable.
Yet the list of complaints about Intelligent Office is long.
Brokers say it now takes twice as long to process a mortgage application as it did before the system launched.
According to users, on the day of launch the client portal that lets borrowers fill in the fact find and upload identification was not live. Sourcing systems were not integrated with Intelligent Office and information was not being pulled through to the suitability letter.
“We asked Tenet to postpone the installation and to pilot it first, but they refused,” said another director also facing a bill of around £40,000 to leave the network.
“If we carried on like this the business could be at risk within three to six months. We can’t carry out the same level of work because of the extra time it takes to complete one application. We have staff going off sick with stress, because they have to do extra hours and my part-time staff are working full-time shifts.”
The director who has to pay the largest bill, which he said is excess of £50,000, called the launch of Intelligent Office a “disaster”. He said: “I don’t want to go but they have forced me out with this silly system. I will have to pay the bill.”
He plans to join the Primis network where he will be able to plug in his own CRM system into Primis’ software, Toolbox.
In the latest video update to members on 23 October, seen by Mortgage Solutions, Tenet chief executive Mark Scanlon admitted that since the system went live there have been more than 50 changes to the Intelligent Office system based on users’ feedback. He added “there’s a list of far more to go”.
Handed the bill
After first being advised they had to serve a three-month notice period, the firms were then told it was in fact 12 months because they had taken funding from the network which altered the original terms of their contracts.
The extension meant they would have to pay a full year’s professional indemnity fees, even if they left one month after the insurance had been renewed.
They must also pay two years’ fees to the Financial Conduct Authority, up to 2021. Firms say they were not charged FCA fees for the first two years of membership at Tenet.
They say being charged two years’ fees on exit is unfair because their turnover, which is used to calculate their FCA bill, is much larger now than when they first joined the network. This means they are subject to a much larger fee.
A system with potential
Not all advisers are unhappy with the switch to IO. Phil Terry, managing director of Square Financial, has been an appointed representative of the network since 2005 and has no plans to leave. He is part of a Tenet network focus group that meets quarterly. He has been feeding back how the system can be improved and working with it to test the changes.
He said: “The system is not ideal but there is a potential there. We are only using ten per cent of its capacity at the moment. It will take time before they can make all the changes and configurations, but they are listening and trying their best.
“Tenet is working hard behind the scenes which perhaps brokers don’t realise, and they can only communicate the changes once they have been implemented.”
A spokesperson from Tenet said: “We have more than a thousand users now operating our instance of Intelligent Office on a daily basis and Intelliflo has a further 24,000-plus users using the software.
“We designed our best practice advice journey in partnership with a number of working groups of members and this has been rolled out to our wider adviser population through a variety of training and communications.
“The client portal is an optional feature for firms and can only be set up once the system is live. It is being rolled out to all members who have registered their interest.
“The Twenty7Tec integration will go live as soon as Intelliflo releases it.
“Our professional indemnity insurance, including our unique lifetime run-off cover, operates in line with any annual contract.
“We can’t comment on individual contract notice terms however.”