The FSA has decided to apply its ban on platform rebates to execution-only propositions.
In today's consultation paper, the watchdog confirmed plans to ban both fund manager rebates - payments from providers to adviser platforms - and cash rebates paid from providers to consumers via platform cash accounts.
But it also plans to read across the rules impacting adviser platforms to execution-only platforms. The move could have a significant impact on direct to consumer offerings such as Hargreaves Lansdown.
"A number of the consumers of non-advised services interviewed claimed the platform service was free to them - which is perhaps unsurprising, since non-advised services are often advertised as such," said the FSA.
"Improved transparency in this market would help consumers compare the services of different platforms and form a view on whether different products available are value for money."
Citing research from Deloitte, it added prices charged by execution-only platforms are "substantially" higher than their advised counterparts.
But it also said execution-only propositions enjoy lower costs.
"With a typical charging structure in the advised sector, 50bp from a fund with an AMC of 150bp would be used as trail commission for an adviser," said the FSA. "However, in the non-advised sector, this payment is kept by the platform, together with a typical platform charge of 25-30bp, although a portion of it is passed on to the consumer in some cases."
"So it seems that non-advised platforms charge more for their
services than advised platforms, but our consumer research indicates that some consumers are given the impression that this service is free."
Today's decision could also impact other adviser platforms set to launch execution-only offerings, including the likes of Ascentric, Nucleus and Axa Wealth's Elevate.
Following publication of last August's platform policy paper - in which the FSA indicated it will read-across rebate rules to execution-only players - Hargreaves Lansdown's shares plunged 10%.
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