Honister Capital moves away from income-based charge

Honister Capital, the private investment company which owns two networks and a national IFA, is to roll out a new charging proposition for firms.

Currently, firms are charged solely on a straight percentage of income, but the business will move to a hybrid model of fixed and variable fees, which it said would be "fairer and more transparent".

Fixed charges will include FSA fees, professional indemnity insurance (PII) cover and a levy for core services, such as compliance support.

The variable element will reflect the income generated by the adviser firm and any additional services used.

Honister said the change would be implemented in two stages. The first stage, which will take effect from November, will address some of the increased costs of trading over the past year using the existing charging structure.

The second stage will be to roll out the hybrid proposition from the first quarter of 2012.

Honister Capital was launched in June 2009 after acquiring The Money Portal's advisory businesses: networks Burns-Anderson and Sage Financial Services, plus national IFA Bates Investment Services (now Honister Partners).

Richard Pearson (pictured), CEO of Honister Capital, said: "We believe this new charging model, developed in consultation with our advisers, will deliver a transparent, fair and competitive charging proposition.

"Following the feedback we have received the costs of core functions will now be shared equitably on a per-adviser basis, while the cost of providing for increased risk and compliance is borne by those who operate in higher risk business areas or consume extra resource due to their volumes of business."

Pearson added he expects a "small number" of advisers to leave the group before the end of 2012, but that the "vast majority are well on their way to securing business models ready to tackle the current challenges".