Consolidator looking to buy brokers or recruit them to its network division
Towergate is looking to target brokers that are facing problems with the FSA’s rules on goodwill that came into effect this week.
The consolidator is looking to buy brokers that are struggling to manage the goodwill on their balance sheets, or recruit them to its newly formed network division.
The new rules mean brokers can no longer include goodwill in their solvency calculations. It is predicted that as many as a few hundred brokers could fail to comply with the rules.
Grant Ellis, chairman of Towergate’s network division, said Towergate could offer troubled brokers a range of options to deal with their goodwill problems.
This could include selling to Towergate or becoming a network member. As a network member, brokers could benefit from a subordinate loan or could delegate the handling of client monies to Towergate in order to reduce their capital requirements.
Ellis said: “Brokers that are struggling with goodwill are not necessarily bad businesses. Towergate has the resources and expertise to help them.
Meanwhile, the FSA has warned brokers that they have a duty to inform it if they fail to meet the new rules on goodwill. An FSA spokesman said it was aware of some brokers that were at risk and was working with them to deal with it.