View more on these topics

AJ Bell boss urges return of cash rebates in industry talks with FCA


AJ Bell chief executive Andy Bell is pushing for the return of cash rebates and greater pensions simplification in a move to drive the financial services industry forward.

Bell, who co-founded the provider in 1995, has discussed with the FCA a number of major initiatives that he believes will deliver improved competition in the platform market and better engagement with pension saving.

Last week Money Marketing reported on Bell’s call for regulatory guidance on transferring clients in bulk to a new platform amid concerns advisers were finding the compliance burden too onerous.

He also believes the FCA’s interim report on the asset management market, published in November, could provide an opportunity to redress the balance on post-RDR charging.

Bell argues bringing back cash rebates, which the FCA banned in April 2014, would address the concerns about charges highlighted by the regulator in the asset management study.

He says: “In the report the FCA says platforms are in a unique position to put pressure on fund managers and get a better deal for clients. But that’s what we were doing before via cash rebates, and if the FCA had allowed us to continue offering these, that’s what we would be doing again.

“The RDR has shone a spotlight on advisers and platforms, whereas fund groups in the main have created a new share class at 75 basis points and not given up a penny’s revenue. The asset management study was right to say fund managers have not really embraced the RDR, and certainly haven’t moved much on charges barring a few exceptions.”

Competitive tension

Bell says cash rebates are understood by clients, advisers and platforms and offer “competitive tension” by allowing platforms of scale to secure better pricing.

He adds: “There has been an opportunity lost here. The FCA may decide to fight the fund groups in a different way. I’ve given the regulator my thoughts on this, and the FCA should be big enough to say it has tried something, it hasn’t worked, and now they can go back and relax it.

“It’s all about what’s best for the consumer; politics shouldn’t come into it. With a new team in place they can admit cash rebates were a force for good and look at reintroducing them.

“It would also help them achieve the objectives set out in the asset management study.”

On pensions, Bell wants to see a separate pension tax relief system for defined benefit and defined contribution schemes, with the lifetime allowance in place for DB schemes and the annual allowance applied to DC pensions.

He says: “Take away the legislation that tries to cover DB and DC schemes, and instead for DB you limit the benefits and for DC you limit the money paid in without penalising good investment growth.

“If you structured it on that basis, then the legislation would only need to stretch to a few pages to ensure there was no abuse of the different systems. That would create a far simpler pensions regime, and a lot of the complications we have now would fall away.”



Platform boss calls for FCA clarity on bulk transfers

AJ Bell has called on the FCA to provide clarity on the suitability process advisers should follow when transferring clients in bulk to another platform. Speaking to Money Marketing, chief executive Andy Bell says many advisers are reviewing the platforms they use as a result of the major replatforming exercises under way across the platform […]

Profile: Novia’s Bill Vasilieff talks turning a profit and the future of platforms

The secret behind Novia’s success lies in its technology and large discretionary fund management range, according to chief executive Bill Vasilieff. But the path to this point has been far from smooth. In 2001, Vasilieff worked on establishing the Selestia platform. Six years later, after it was acquired by Old Mutual to be merged with Skandia’s […]


James Hay bans non-standard investment purchases through platform

James Hay will no longer allow non-standard investments including overseas commercial property, storage pods and carbon credits to be bought through its platform. The company says it will “continue to fulfil its obligations” with existing non-standard investments. From today, new customers will no longer be able to buy non-standard investments through James Hay’s platform except for in SSASs. […]


Britain's “Forgotten Army”: The collapse in self-employed pension membership – and what to do about it

Pension scheme membership among employees has risen by more than five million in the past four years because of the policy of automatic enrolment into workplace pensions. But Britain’s army of 4.4 million self-employed people, who account for one in seven of the workforce, are not covered by automatic enrolment. Pension coverage among the self-employed […]


News and expert analysis straight to your inbox

Sign up


There are 5 comments at the moment, we would love to hear your opinion too.

  1. I don’t disagree

    The FCA like the FSA before them is starving the industry of oxygen, and we know when, staved in this way, like our bodies, this oxygen is diverted to the most important parts, leaving the rest to shut down and one by one, until the inevitable…….

    In truth regulatory dogma, has to seen as infallible, even in a world where it is very rarely right !

  2. Freddie Findlater 23rd January 2017 at 1:47 pm

    It’s a tough balancing act and depends what customer-focused-mantra-of-the-month is winning at the time: Simple but opaque (cash rebates) versus Complicated(ish) but transparent (current model)

    Notice that neither are perfect…

    • What is worse than imperfection is flip flopping as it goes against the F-pack stated mantra of clear, fair and not misleading and continual and rapid change, which is what we have seen in both regulation and government policy appears designed to confuse and mislead the voting public.

  3. Freddie – cash rebates are not opaque if they are paid to the customer. They were opaque before RDR when the platform retained some of them and no one knew how much. If they are paid to the customer they are as transparent as unit rebates – arguably more so.

  4. As I have long argued. increasing a rebate is quick and simple. Creating a whole new share class at a lower price and then transferring existing investors from one share class to another is massively expensive, complicated and confusing. No wonder it doesn’t happen. The ban on cash rebates to investors was a massive mistake by regulators – although that was largely diffused when cash rebate reinvestment was belatedly allowed into near cash funds which units were them earmarked for encashment when the next fees were due. Complicated to administer but in practice little different from plain cash rebates.

    The remaining problem is therefore the HMRC tax reversal after 15 years of saying the opposite – which nobody in the industry had the gumption to fight even though some had much stronger legal grounds than others. The tax position (i.e. income or not) all depends on how the rebates were described both in the platform/fund manager and platform/client agreements. Not all had it right but even those that did were dissuaded from fighting it!

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm