Skandia has added its voice to the debate on platform payments by arguing a ban on rebates will result in a poorer outcome for consumers.
The platform says a total ban on platform rebates - something the FSA indicated it is leaning towards in its recent Platforms Discussion Paper - is likely to have "severe unintended consequences" for consumers, thereby defeating the prime objective of the RDR.
"Preventing rebates being passed back to consumers would negate all current platform charging structures and is not necessary in order to deliver the transparency required by the RDR," it says.
The platform believes a complete ban on rebates - including those passed back to customers - will remove healthy market forces from the fund management industry.
It adds the current system ensures platforms agree competitive prices with fund groups for consumers, enabling investors to benefit from platforms services and financial advice for the same price as funds off platform.
Removing this mechanism, it adds, will likely result in increased costs for consumers regardless of their current charging structure.
Platforms should be able to receive rebate payments from fund groups and pass these back to the customer as long as they are fully disclosed, Skandia adds, creating transparency through an unbundled charging structure.
"If there is a total ban on rebates, even if they are passed back to the consumer, none of the current platform charging structures will be permitted post RDR," says Peter Mann, chief development officer at Skandia.
"There seems to be a misguided view that if rebates are not permitted the fund supermarkets would be doomed and the platforms with unbundled charging structures would prevail.
"Given that the two largest fund supermarkets have already announced their intention to unbundle their charging structures this is simply a misinformed view proliferated by the smaller platforms desperate to grow their businesses.
"What is more important during the platform consultation phase is to consider the impact that the removal of rebates will have on the end investor."
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