Ascentric chief Hugo Thorman says the FSA's "shocker" of a proposal to ban cash rebates is "fraught with difficulties" and has vowed to focus his energy on overturning the decision.
Speaking at a Legal & General (L&G) RDR webcast this week, Thorman (pictured) said the proposed ban will result in serious consumer detriment and pledged to engage with the regulator in a bid to understand its thinking.
The FSA maintains the ban will aid transparency and ensure clients do not believe the advice they are getting is free.
"The only thing I'm really focused on is reversing the decision to ban cash rebates," he said. "I think it's going to cause dramatically more detriment than the corresponding benefit. In fact, I cannot see any corresponding benefit - that is the whole point."
Voicing his "alarm" at the proposed ban - set out in the recent consultation paper - he said he cannot comprehend the thinking underpinning the idea and says other wrap outfits are "non-plussed" and share his viewpoint.
He added the current wrap charging structure - whereby rebates are paid to the client account allowing them to clearly see how much they are paying for the fund, platform and adviser - is completely transparent and represents the "perfect solution".
The alternative proposal to issue rebates in the form of units will be a complicated undertaking unfavourably impacting consumers, he added.
"To credit units is fraught with all sorts of difficulties in terms of actually keeping track of those units and the CGT implications."
Cofunds sales and marketing director Alastair Conway thinks a ban on cash rebates could lead to unintended consequences such as information overload for consumers.
"The regulator is motivated by trying to make making things clearer to people and easier for people to understand but we might get the unintended consequence that it does quite the reverse."
L&G RDR and commercial director Danny Wynn agreed a cash rebate ban would be confusing for customers trying to make sense of a multitude of tiny transactions. He thinks whilst the FSA likely feels it has found a "neat solution" in its proposal, it is in fact displaying a lack of understanding.
"I am not sure whether the regulator has seen how much this will actually play out in practice," he says.
Conway fears the proposed ban could spoil some of the wider benefits of RDR and says it is now incumbent on platforms to engage with the regulator.
He cautioned the FSA against bringing in too many changes at once and mooted the idea of putting the rebate ban temporarily on the backburner.
"My urge to the FSA would be to allow some of the other changes and the good parts of the RDR to begin to permeate into the market.
"If, ultimately, cash rebates need to be addressed then maybe that's something we'll look at three or four years down the road when we have seen how the world where cash rebates is allowed plays out."
Wynn said given the fact the FSA will not be around in a few years' time it might be reluctant to adopt a 'wait and see' approach.
Thorman, meanwhile, said he will now concentrate on engaging with the FSA.
"We must go back to the regulator and find out exactly what is was they are trying to achieve."
But Conway and Wynn expressed doubt the FSA will reverse its plan to ban cash rebates.
Whilst Conway said he would like to see progress made around the thorny issue, this was more "hope than expectation".
Wynn pointed out the history of RDR papers suggests although the FSA is open to make changes after the discussion paper stage, amendments made thereafter and prior to final policy amount to mere tweaking around the edges.
"I wouldn't be surprised if we get pretty much what we see today," he said of the final rules.
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