The platform paper has been delayed yet again. Does this mean the FSA is about to make a surprising U-turn?
The Retail Distribution Review (RDR) may have prompted a momentous change in advisers’ operations, but at least they knew what was going to happen (to an extent), and when.
Platform providers haven’t been quite so lucky. Delays have dogged the Financial Services Authority’s (FSA’s) platforms paper – which is expected to rubber-stamp bans on both payments from product providers to platforms and cash rebates to advised customers – ever since it was announced back in 2010.
Consultation stalled throughout 2011, after a number of platforms reacted adversely to some of the regulator’s suggestions.
Delays on the platform
The final paper was due to be published in December – and was expected to give stakeholders at least 12 months beyond the implementation of the RDR to prepare for the changes – but this date has also elapsed.
Publication of the paper was pushed back to the first quarter of this year, and this week the FSA admitted it will be April or May before the final paper is available. Realistically, it will be the middle of 2014 before platforms have to implement the changes.
The problem centres over the proposed ban on cash rebates. Aside from Skandia, which has been an enthusiastic supporter of the regulator’s cash rebate alternative – unit rebating – most platforms have argued against a blanket ban.
The primary reasons are cost and complexity. In the FSA’s latest consultation paper on the issue, it said that banning cash rebates would lead to greater transparency.
This may be true, argues consultancy Adviser Asset, but at what cost?
While Cofunds has moved to clean share classes, Skandia’s unit rebate system makes it difficult to compare the two.
“The unit rebate element for platforms adopting this model is now harder to quantify than cash rebates, as the unit rebate is recycled into the platform investments and will be subjected to further charges and investment growth,” said Adviser Asset director Colin Turton.
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