RDR: FSA pushes platforms to unbundle charges
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The FSA has proposed to ban any payments from providers to platforms and stop rebates to consumers in a raft of measures seeking to unbundle platform charges.
The proposals announced in the FSA’s Platforms: Delivering the RDR paper today, come after the FSA’s thematic review revealed that “some wrap platforms disclosed their charges so poorly that customers were unlikely to understand the amount or effect of the charges”.
The paper says: “The bundled charges model of platform remuneration may hamper the potential growth in market share for many products which do not or cannot pay fund supermarkets.”
The FSA says that if platform charges and product provider charges are separated, consumers can judge the value of the services they are being provided with more easily and if a fund manager reduces its charges, the customer is likely to benefit directly from this.
The paper adds: “Any increases in platform charges will be clearly visible to its customers and their advisers. With a bundled charging model this may not be apparent.”
The FSA has also clarified its stance on rebates to customers.
It says it will consult on additional rules to “make clear that product providers must not defer, discount or rebate their product charges in such a way that these charges could appear to offset any adviser charges that are payable”.
The FSA has also warned fund supermarkets that charge minimum fees to fund groups that this could price smaller fund managers out of the market.
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Readers' comments (2)
Mr Smug | 26 Mar 2010 3:57 pm
FFS FSA
What are they trying to achieve here?
How you pay is irrelevant - it's the amount that counts.
It's much easier to explain the charges on Cofunds to a client (initial charge + annual charge and we get paid the following...) than it is to explain Transact (fund managers initial charge and annual charge, our initial charge and annual charge, Transacts annual charge and various transaction fees - don't forget to keep 2% aside to meet fees).
There is no right or wrong way to do this and we use both the companies above. It is for us to judge which works for which type of client.
We don't need the FSA banning perfectly legitimate business models. Experience shows us that unbundling usually costs the client more.
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You must be joking | 27 Mar 2010 8:31 am
Mr Smug
Well said... at last someone else talking common sense!
We should get together!
Cheers
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