On the issue of rebates, we welcome clarity from the FSA. It’s only right that the end investor and their adviser are absolutely clear about what they’re getting, so that the decision becomes one about value not just price.
Whilst rebates are not wrong, there is a danger they mask the real cost of the process, and the decision to ban them is an essential step towards enabling people to accurately assess the value of the service they’re receiving. If you believe in the value of the service you provide, as we do, then you’ll have nothing to fear from justifying the platform explicit charge. That level of transparency has been asked of advisers so it is only logical that it should also apply to the rest of the value chain.
That said, we’re extremely disappointed that once again the opportunity to create a truly level playing field has been passed by. If the FSA genuinely wants to restrict product provider influence the same rules must be applied across the entire industry. Yet the proposals in CP12/12 ensure that insured funds will remain in their isolated bubble of obfuscation in an increasingly transparent world. We see no reason why the end investors won’t value transparency in this area, too, and without it we’ll be left with an unacceptably unlevel playing field.
One element of the current regime that we don’t want to see disappear, is the ability for platforms to secure added benefits for investors through driving better terms from the funds groups. We would not want to see an artificial price barrier created and there is a genuine concern unit rebates will simply be unworkable and confusing to the investor.
As an industry we’ve become so adept at muddying the water, whether through the use of jargon or convoluted charging structures, that it can feel sometimes that transparency itself is often viewed as a dirty word. We took the view a while back to embrace not only the letter of RDR, but also the spirit of it. So in September we pinned our colours to the mast ahead of the rest of the market and aligned our new pricing model with the true spirit of the changes, and announced our intention to make it completely transparent.
With the proposals set out in Consultation Paper 12/12, our strategy for transparent pricing has been proved not only to be in the best interests of the end investor but also the right one for the business. We’ll continue our drive for a clean share class with renewed vigour now.
Alastair Conway is sales and marketing director at Cofunds