Bestinvest chief executive Peter Hall has slammed “embarrassed ” execution-only platform rivals for refusing to disclose payments they receive from providers and criticising the FSA’s latest execution-only proposals.
Hall says his firm welcomes the FSA’s focus on improved disclosure requirements outlined in this week’s platform policy statement. The paper revealed the FSA will consider the treatment of both advised and non-advised platforms as part of its payment ban proposals and confirmed that execution-only platforms will have to fully disclose commission or fees from fund managers.
Hall says it is hard to understand why competitors are opposed to publishing such payments.
He says: “Are these competitors embarrassed to let their clients know how much they actually earn for providing supposedly ‘low-cost’ execution only services compared with the limited cash rebates they offer? Why shouldn’t a client understand whether a particular fund or manager might be promoted because they are prepared to pay more for distribution.”
Yesterday, Hargreaves Lansdown chief executive Ian Gorham told Money Marketing he is against the FSA’s proposal to force disclosure of “commercially sensitive” information on fees paid to the platform from third parties. He says: “It seems odd that we would be required to disclose this information and we are concerned about the consequences for clients if fund managers have to disclose the deals they are giving to everybody. You could end up with a market that offers the same deal everywhere rather than one where firms compete to give the best price.”
Hargreaves Lansdown tried to allay concerns about the impact of Monday’s FSA platform policy statement, suggesting the changes required will have no material impact on the firm. The firm’s share price fell over 12 per cent on Tuesday.
Hall says investors need to know if they are getting good value for money and that current agreements with fund managers do not allow that disclosure.
He says: “We welcome a new world under RDR where disclosure is required. The same high standards of disclosure should apply both to advised purchases and those on an execution-only basis. There should be no difference.”
Hall says new business models will emerge from the final rules on the mechanics of payments, while investors will also benefit.
Hall says: “Existing providers will need to respond rather than sticking their heads in the sand. We are indifferent which way payment is made because we are confident that we are offering great value for money – the important thing is that investors are able to test that through transparent charging.”