The Financial Services Authority (FSA) has this morning confirmed its intention to ban both payments from providers to platforms and cash rebates to consumers.
In a consultation paper, the regulator said the way in which the consumer currently pays for the platform service "hinders transparency" and "has the potential to negatively affect competition in the market".
It said, in line with the changes introduced on adviser charging in the Retail Distribution Review (RDR), it does not feel product providers should be able to "buy" distribution.
The ban would affect both the advised platforms market and non-advised (direct to consumer) platforms.
Meanwhile, the regulator has also confirmed its intention to ban cash rebates to consumers - but only on business written after the rules are introduced.
Additionally, the regulator said this approach would not prevent rebates being made through additional investment into the product (unit rebating).
It said it had listened to the concerns of stakeholders but that, in its view, cash rebates "hinder transparency and potentially provide a mechanism for commission to continue being paid".
In the consultation paper, it said: "It is worth clarifying that the ban on cash rebates to consumers would apply to new business from the date of implementation of the rules and not to retail investment products purchased before these rules come into effect."
Final rules will be outlined later this year, with implementation no sooner than 1 January 2014.
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