The firms says the cash will help Appoint Representative advisers deal with exit terms such as financial penalties, PII run-off or withholding income.

The funding solution has been developed for appointed representatives (ARs) transitioning to ValidPath that have established businesses with recurring revenue and client policies that will need to be novated (moved to a new firm). 

It provides qualifying ARs with access to a facility up to £100,000 to support working capital purposes or exit fees as part of a de-authorisation ‘notice period’ and the FCA authorisation process.

Temporary security is required while the facility is outstanding with terms including an initial non-payment interest-only period followed by amortisation period. Repayments are made collectively over 24 months with all payments made from future revenues. 

Validpath said the facility maximises the cash available for the business during its transition period and supports the firm’s cashflow by aligning the repayment schedule to its future revenue. 

Angus MacNee, chief executive of ValidPath said: “An IFA proposition should compete on its merits and not via a punitive lock-in that prevents you leaving to protect an outdated business model and self-interest.”

He said that in the retail wealth space preserving the status quo via financial penalties and barriers remains prevalent.

He conceded that some exit fees were necessary, for example to cover potential liabilities via PII.

He said: “At its core, this new funding solution has been developed to provide a safety blanket for ARs and enable them to choose a network based on what suits their business requirements and future needs, not their financial situation or current circumstances.” 

ValidPath is part of financial services and technology group Rimbal. Based in Cardiff it was set up as an FCA-registered IFA network in 2002. It serves a network of more than 100 financial advisory businesses and independent financial advisers, mortgage brokers and support personnel and their clients across the UK. It says it is the only network with multiple FCA authorisations, a captive insurance company providing PII certainty, Open Banking permissions, proprietary network management technology and a funded succession solution for IFAs (an alternative to consolidation).