Leaving a Financial Services Network: Support for IFAs Navigating Change

The financial advice sector continues to evolve and from time to time advisers may find themselves reconsidering their relationship with their network, whether due to changes in business strategy, regulatory concerns, commercial pressures, or network instability.

For many Independent Financial Advisers (IFAs) and Appointed Representatives (ARs), leaving a network can be a complex process that raises significant legal, regulatory, and commercial questions and all in a time of upheaval and change. Understanding your rights and obligations, considering any issues and managing those issue before taking any action is critical.

At Fletcher Hixon, we have extensive experience advising financial advisers, ARs, and regulated firms on the issues that commonly arise when exiting a network or dealing with the aftermath of a departure. As well as being lawyers, we have held senior positions within FCA regulated financial advice firms/Networks, so we know exactly the issues you are facing, and how best to resolve them.

Key Issues IFAs Should Consider

Appointed Representative Agreements

The starting point for any adviser considering an exit is their Appointed Representative Agreement (ARA). These agreements often contain very detailed provisions concerning:

• Notice periods

• Client ownership and servicing rights

• Ongoing fee/commission arrangements

• Termination rights

• Handover obligations

• Recovery of outstanding debts or charges

• Recovery of client files and records

• Run off cover rights and obligations

• Post termination obligations – particularly ongoing indemnities

• Personal Guarantees

• Restrictive Covenants

We know that disputes frequently arise where advisers and networks have differing interpretations of these provisions. Obtaining specialist advice at an early stage can help avoid costly mistakes and protect the value of your business.

Professional Indemnity Insurance and Run-Off Cover

Professional indemnity insurance (PII) is another area that often causes concern when a network relationship comes to an end.

Questions commonly include:

• Who remains responsible for historic advice?

• What claims are covered under existing policies?

• Is run-off cover required or mandated?

• What are the implications for future complaints?

• How will my clients be protected?

A failure to properly address insurance arrangements can expose advisers to significant financial risk years after leaving a network.  This is particularly so in times of FCA reviews and the period of time a customer is able to bring a complaint in.

The FCA Long-Stop Issue

One of the lesser-known risks facing IFAs is the absence of a traditional 15-year "long-stop" for complaints referred to the Financial Ombudsman Service. Unlike many other professions, advisers can remain exposed to complaints long after advice was given if a client only recently became aware of a potential cause for complaint. This can have significant implications for retiring advisers, those leaving a network, and firms considering succession or sale.

Careful consideration should therefore be given to professional indemnity insurance, run-off cover and the allocation of liability for historic advice when planning an exit strategy.

In July 2025, the FCA and FOS consulted on reforms that included the introduction of a 10-year long-stop for complaints brought to the Financial Ombudsman Service. The proposals were intended to create greater certainty for firms while maintaining consumer protection. However, these proposals were subject to consultation and have not yet become the established position.

Careful review of policy terms and regulatory requirements is therefore essential.

Restrictive Covenants and Client Relationships

Many network agreements contain restrictive covenants designed to protect the network's commercial interests.

These may seek to restrict:

• Solicitation of clients

• Movement of introducers

• Recruitment of staff

• Use of confidential information

Whether such restrictions are enforceable will depend on the specific wording of the agreement and the surrounding circumstances. Advisers should seek advice before approaching clients or taking steps that could inadvertently breach contractual obligations.

Commission, Fees and Exit Payments

Another common area of dispute between IFAs and their networks concerns:

• Ongoing trail commission

• Adviser charging arrangements

• Fee entitlement following termination

• Clawbacks and debt recovery demands

Understanding the contractual position can assist advisers in protecting revenue streams and achieving an orderly transition to a new business model.

The Importance of Early Advice

When faced with uncertainty, many advisers delay seeking professional advice in the hope that matters can be resolved informally.  This is especially so in a distressed situation where everything is happening at pace and there is a lot to do. While commercial solutions are often achievable, obtaining early legal guidance can provide clarity regarding your position and help avoid escalating disputes.

In many cases, the most effective outcomes are achieved through proactive negotiation before positions become entrenched.

How Fletcher Hixon Can Help

Fletcher Hixon has significant experience advising IFAs, Appointed Representatives and financial services businesses on matters arising from network exits and restructuring.

Our services include:

• Reviewing Appointed Representative Agreements

• Advising on termination rights and obligations

• Assisting with disputes involving networks

• Guidance on professional indemnity and run-off cover issues

• Advice regarding restrictive covenants

• Support with commission and fee entitlement disputes

• Negotiation and dispute resolution

Considering Your Options?

If you are currently part of a network and considering your future, or if you have recently left a network and are facing uncertainty regarding your contractual or regulatory obligations, obtaining specialist advice at an early stage can make a significant difference.

Fletcher Hixon Solicitors understands the commercial realities facing IFAs and ARs and can provide practical, strategic advice to help you navigate the process with confidence.

To discuss your situation in confidence, contact us at email:

contactus@fletcherhixon.co.uk