Platforms risk being undermined by a lack of transparency and must address some crucial questions if the RDR is to be effective, warns Novia.
Whilst being fully behind the FSA's proposals to clean up the industry, it urges the regulator to ensure that platforms get into shape by addressing issues such as providing a broad range of assets, clear charging and provider independence.
Citing some of the conclusions of Ernst & Young's recent paper 2012 Going for Gold, it says: "The lack of transparency will undermine some platform providers, as they have factored in the opaque kick-backs into their financial calculations."
Novia CEO Bill Vasilieff says that 80% of advisers now use platforms and if a platform is wondering if it is RDR-ready then it should look at the following areas:
• Does it have access to a broad range of assets including Exchange Traded Funds and alternative investments?
• If it claims to be 'free' to clients, how will the breakdown of charges for advice, investment management and product wrapper administration be made transparent to clients?
• Does it reimburse all negotiated rebates back to the client ?
• Is it flexible enough to allow an adviser to set up different charging levels for different clients depending on the work required/level of advice given?
• Is it completely independent of any product provider influence or bias in the funds and assets it makes available?
"Will AMC rebates just become more transparent or will the FSA mandate that they belong to clients?" questions Vasilieff.
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