Banning bundled pricing will hinder advice process, warns Cofunds
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Cofunds is warning that the FSA’s proposals to ban any payments between providers and platforms post-RDR could hinder independent advice and confuse consumers.
Cofunds says banning bundled pricing will not make pricing clearer for the end customer. It also warns that banning the bundled pricing model could hamper the independent advice process.
A Cofunds spokesman says: “To our mind platforms hold the answer to the transparency the FSA seeks, and we welcome the move towards making pricing clearer for the end customer. However, experience has taught us that laying bare all the different parts of the transaction does not necessarily make it clearer, but can add another layer of complexity for the consumer.”
“The measures proposed in this latest discussion paper, particularly around unbundled pricing and platform suitability, run the risk of hindering that process. We run the risk of this being detrimental to our overall aim of helping advisers take financial planning to the wider market.”
Cofunds says the majority of advisers and their clients prefer a bundled pricing option, therefore a suitability test should be applied to pricing.
In January, Cofunds revealed it is to roll out an unbundled pricing option on its platform towards the end of 2010.
In response to the RDR, Cofunds also says that the FSA’s discussion paper does not “address the fundamental problem of how, as an industry, we make it easier for consumers to save”.
It says: “How do we ensure that the application of technology in a post-RDR world genuinely helps consumers realise the value of advice and not simply the cost of a fund or product?”
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Readers' comments (2)
Mister Maker | 1 Apr 2010 12:28 pm
Cofunds against unbundled platforms on the basis that it will hamper the advice process! How can a customer realise the value of advice when they do not understand the cost?
In terms of improving consumer saving I would say that this is as much a society issue as opposed to an industry and we will not create a solution by ourselves. However, the status quo clearly isn't working (for customers anyway not sure unbundled platforms take the same view) so it needs to be changed. I'm sure Cofunds will be and strong enough to clearly disclose ALL income they receive as part of their proposition.
Surely the sole arbiter of value is the consumer and therefore they need to be given the right information to make that decision. If they don't see the value in transparency - is the problem with how the information is provided or with the information itself (i.e. it's too expensive!).
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Anonymous | 1 Apr 2010 8:31 pm
Against on the basis it will blow open their model and cost a fortune to sort out - pushes that elusive profitability out yet again
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