Speaking at a platform seminar in London today, Aviva Wrap head of marketing Nicholas Burton criticised platforms who impose charges on cash accounts, typically 1-2 per cent,claiming it is “like a back door to take additional charges from customers”.
Burton said: “The FSA did identify in its consultation paper that most platforms tend to have big charges on money held in cash accounts. That is something the FSA will be watching very carefully because it is a bit like a back door to take additional charges from customers. That is another reason why you have to know the split of who is getting what.”
Burton also called for the FSA to decide whether adviser charging will be subject to VAT.
He said: “This is one area of adviser charging where the FSA has made a dog’s dinner. The FSA has given no clarity whatsoever on whether it is subject to VAT or not, and it has fudged it by saying it is a matter for HMRC. HMRC has said they are looking at it and expect to come out with a view prior to implementation of RDR.
“That is one of the points we will be lobbying very hard on in our feedback statement at the end of May.”
He also questioned the future of the fundsupermarket model and the use of model portfolios and guided architecture.
He said: “The business model does not allow advisers to give whole of market advice. The only way that can change is by adopting a wrap model. A wrap model is not dependent on rebates and therefore can provide access to equities, exchange traded funds and the like.”
He added: “The fundsupermarkets tend to use mechanisms to win negotiations with the fund groups. Customers investing in funds that are there only because the platform is getting a higher level of rebate may be in a position where their investment choice is being biased by the level of rebate that is paid to the platform.”