The FCA has confirmed that platforms are still able to receive a rebate from a fund manager in cash, though these must then be passed on to the consumer in the form of additional units.
As Portfolio Adviser has written previously, there is pressure for platforms to confirm their operating model and there is now going to be a clear divergence of strategies among providers. Standard Life has confirmed that it is to continue its strategy of moving to clean share classes only and removing the processing of rebates entirely, both cash and unit.
Skandia, on the other hand, will prioritise the addition of clean shares classes and give a unit rebate “where possible in order to deliver the best possible fund prices to advisers and their clients.”
Reiterating the key driver behind its announcement, the FCA commented: “We are proceeding with our core proposal that requires a platform service to be paid for by a platform charge disclosed to, and agreed by, the consumer.”
The rules will come into operation on 6 April, 2014, although the platforms will have two years to move existing customers to this new charging model. From then on, customers will be explicitly charged for using the platform’s services.
Here is the FCA platform paper in all its glory.
Christopher Woolard, director of policy, risk and research at the FCA, explained: “These rules ensure that platforms put customers at the heart of their business. Customers will know what they are paying and the service that they can expect.
“These changes will allow both investors and advisers to compare the costs of investing through different platforms and make an informed decision on whether using a platform represents good value for money.”
This is not the end of the FCA’s platform review.
It feels there is a “strong argument” for similar rules to apply execution-only business transacted through a platform as well as execution-only firms that white label a platform.
Will this affect the platforms you use? Will you have to choose between Standard Life and Skandia?
