Losers appear to be the execution only platforms and the fund supermarkets, though none have stood up and said so – quite the opposite in fact, as Peter Hargreaves of Hargreaves Lansdown argues that the rule changes will not hurt his business.
The fact is however, deals that are currently done behind closed doors with fund management groups will come into the open and this will have consequences, though not necessarily the ones that the FSA believe.
Hargreaves believes that consumers are less interested in the margins that his business obtains, and he may be right, though he anticipates smaller rival businesses to fall away.
ITs among the winners
On the other hand the winners are already beginning to crow, with early commentary coming from the Association of Investment Companies (AIC) and some of the more transparent B2B wrap providers like Transact and Nucleus. For them this sounds the death knell for fund supermarkets and other platforms that have relied on cash rebates to sustain their business models.
The AIC, already feeling a sense of optimism about the future of its members with the banning of commissions, now sees another unfair advantage being taken away from fund management groups who will be unable to sweeten deals with platform providers.
I cannot help feeling that AIC members still need to shrug off their complacency and starting banging on a few doors – rule changes alone are not going to stoke the demand for their products.
It is a good week for transparency, but I cannot help but wonder what the final cost will be to the consumer. Fewer savings would be my guess.
