Protection division of new network unveiled next month
Disgruntled former members of DBS network are launching the protection division of a new network next month, aimed at IFAs who do not want to pay the 30% hike in Misys' fees.
Although the name is yet to be revealed, the network will see its first arm take shape in March to target the non-regulated mortgage, protection and insurance markets.
An investment network and a fee-based network are expected to be launched at a later date, subject to authorisation from the Financial Services Authority (FSA), which will fall under the control of a holding company, Utopia.
Evan Owen, former member of DBS and founding member of Utopia, says intermediaries are invited to sign up either as shareholding members of the protection .or join as ordinary members.
At least 11 product providers, including life offices such as Scottish Equitable, Scottish Provident, Norwich Union and Skandia as well as other companies, are said to be in negotiations with founders of the company about offering its products. However, it is stressed that product providers will not be permitted to take a financial stake in the protection network.
Several intermediaries are already thought to have taken a stake in the network.
Shares in the network cost £1 each and there is a £75 a month subscription cost to the network, which, Owen says, will include the cost of professional indemnity insurance. Utopia will take a 7.5% commission share and there is a 2.5% retention for the clawback on products sold.
Owen believes the commission levels ' paid fortnightly ' offered by Utopia are the highest in the industry, and many providers are on a two-year earnings period.
All members will deal with sub-agencies for compliance and administration and a 'Buddy' system with National IFAs will be created for those who only want protection business, but still earn an income from investment business.
A website hosting and quotation engine integration service will be set up at a cost of £120 pa, providing unlimited webspace and email addresses.
l Julie Henderson is editor of IFAonline.co.uk
