What are we still waiting for? Predictably, it’s the most technical aspect of the new regime – the role of platforms and rebates – which the regulator has been dragging its heels on, and this happens to be the topic of most import to asset managers.
For months groups have expressed fears that they may have to launch a myriad of confusing share classes for each of their funds; whether or not they truly believe this is a possibility remains debatable but clarification is needed none the less.
“I think most of us have worked out our distribution strategies more broadly, and know where the market’s going – we are in regular contact with DFMs, IFAs and the regulator on most issues but the thing that is really holding us up is the platform paper,” Simon Ellis, managing director, unit trusts at Legal & General, told me.
“Will we be able to or be expected to make any rebate payments to platforms themselves for the services that they provide? The second issue which is very unclear and is a real mess is the treatment of existing trail and should that continue in the event of various circumstances? The decisions themselves haven’t been finalised and the mechanics of implanting those decisions are a nightmare.”
New funds
These are common complaints from those in charge at the various fund groups, many of whom are sitting tight whilst keeping a close eye on what the competition are up to. And to their credit, others have already set the ball rolling – JP Morgan and Schroders, for example, have launched low cost funds billed as alternatives to passives, while the latter has also introduced a platform-friendly flat 0.75% AMC share class for all of its UK-domiciled funds.
How low cost funds fit in with what is already available makes for an interesting debate – will they be favoured over ETFs or are they just a middle-ground compromise between the passive option and paying out for real alpha? This is something we will explore in the next edition of Portfolio Adviser, out in the New Year.
Sad to say, but the longer the FSA delays its final rules on platforms, the more those influential people in the industry will clamour for added time and a delay in implementation. And can you blame them? After all RDR is not the only acronym fund groups have to deal with at the moment as anyone trying to get to grips with MiFID 2, FATCA, KIIDs, PRIPs et al will testify.
