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Categories:Regulation

Skandia isolated as platforms come together to oppose cash rebate ban

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Skandia was the only platform to respond in favour of the FSA’s proposed cash rebate ban with the majority of other platforms submitting a joint response to the FSA calling for a rethink.

A group made up of most of the main platforms, including Ascentric, Nucleus, Novia, Transact, Fidelity, Standard Life, Axa, Aviva, Raymond James and 7IM submitted a joint response to the FSA outlining their opposition to the cash rebate ban.

The other main platform not to be part of the joint submission was Cofunds. It says it is against a ban on cash rebates but, because it had already submitted its own response and one together with the UK Platform Group, it did not want to respond again through the joint work.

The FSA announced plans to ban cash rebates as part of its platform consultation in November but the proposal has been widely criticised by advisers and platform groups. The deadline for submitting a response was yesterday.

Ascentric managing director Hugo Thorman says the FSA should listen to indsutry concerns. He says: “We have explained to the FSA that we do not believe there is a need to ban cash rebates. I was surprised when I first saw that they had proposed the ban. I had to look again to make sure I was not seeing things.”

Skandia proposition marketing manager Jeremy Mugridge (pictured) says Skandia supports the FSA proposal. He says: “We had a difference in opinion with the rest of the group over cash rebates and we believe that we can accommodate the FSA by giving rebates in units rather than cash accounts.”

The IMA has also spoke out again against a ban on rebates in its response to the FSA consultation.

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Readers' comments (7)

  • There is much self-interest spoken in this space. The biggest nonsense of all is that by having rebates competition is enhanced. What a laugh. Rebates should be removed full-stop.

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  • Could it be that development of Skandia's unbundled proposition is perhaps a bit behind schedule so it comes as an opportunity?
    Always nice to have somebody else to blame.

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  • Since when is giving something back to the client such a bad idea that it has to be banned? The Nanny State gone mad.

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  • Cash rebates when used properly to benefit the client as per Transact and a few other genuine platforms are the only way that certain products can be accommodated on a platform when they do not have a net price or commission reinvestment option. It is only when platforms siphon off part of the rebate for themselves that there is a problem. Certain platforms avoid the issue by not allowing access to some, typically structured, products but then they are not whole of Market and should not be used by genuine IFAs. The FSA needs to think this through again and listen to those that DO have clients interests to the fore.

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  • I suspect this stance which smacks of vested interest might have something to do with filling the massive hole created by the £30 million loss in the last set of accouns on top of the 9million loss in the previous set.

    This appears to be a company that bangs on about sustainability when clearly it is haemorrhaging money. It measure's it succes by business written rather than money made.

    If it cost me money to write a £1 of business I certainly wouldnt be setting my stall out to write a million.

    How much longer will Old Mutual support this high head count low technology model. Several years ago Skandia's business objective was to squeeze the market. This appears to have seriously rebound.

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  • re anonymous. I would argue with your comment about the low tech approach and high head count as the Skandia platform has functionalities that others don't. However, I do agree it is all about business written and that they are haemorrhaging money. That said, Old Mutual don't seem to be putting up with it are not putting up with it hence the loss of 120 jobs when Skandia's regional offices closed last year and onging redundancies in their head office, plus they have just announced a 30% increase in the client's investor charge for the platform.

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  • Paul

    I agree the functionality that the adviser sees is very impressive. It is low tech behind the scenes with much being hand cranked which is what drives up the unit price & creates frightening losses.

    Hence low technology high headcount.

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