Platforms will no longer be able to accept cash rebates from 2014. But is there a reason the rules are not extended to other providers?
For anyone looking to spot the next big thing in regulation, a Financial Services Authority (FSA) conference is usually a good place to start.
The (outgoing) regulator often raises issues of concern months before it consults on them and, during a platform session at its latest asset management conference, the talk was all about “adjacent markets” – the execution-only brokers, SIPP providers and life companies exempt from the FSA’s platform rules.
Rob Muskett, from the FSA’s investment policy department, said the regulator would be “very interested” to hear opinions on the subject.
Platforms ask: why is rebate ban just for us?
In June, the regulator confirmed it would stick to its original proposals by banning product provider payments to platforms and cash rebates from providers to consumers from 31 December 2013.
But the message from platforms has been clear: why just us?
“The FSA’s approach to platforms could be to the detriment of consumers,” said Fidelity head of commercial Ed Dymott. “To achieve good consumer outcomes there needs to be a consistency of approach across all long term savings products.
“Narrowly focusing on platforms and excluding life insurers and SIPP providers is illogical, which will lead to a myriad of pricing structures and approaches, which will do little to reduce barriers to investing.”
On a purely self-interested basis, the rules appear to put platforms at a disadvantage.
As a SIPP provider that also runs a platform, James Hay is in a good position to comment. The wrap has seen solid growth in the last year, topping £1bn assets, but still writes 90% of business off-platform.
Head of product development, Chris Smeaton, said he felt that ratio would equalise after the “inevitable” FSA rule change. “We absolutely need a level playing field,” he said. “It’s not fair, is it?”
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