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FCA confirms legacy cash rebates can continue

Regulator has set out circumstances where cash rebates will be allowed to continue and given specific examples.


The FCA has confirmed platform cash rebates on legacy business can continue indefinitely.

The move was confirmed in the regulator’s quarterly consultation paper last week. Money Marketing revealed in July the FCA was consulting on draft guidance regarding the treatment of cash rebates for legacy business following industry queries in the wake of the platform policy statement in April.

A note sent to trade bodies at the time confirmed the FCA had a number of industry queries regarding legacy cash rebates.

The FCA has now set out circumstances where cash rebates will be allowed to continue and given specific examples.

The examples include where a client’s investment or regular contributions to an investment are reduced and where a product is re-registered between platforms but otherwise unchanged.

The regulator’s earlier platform policy statement confirmed a ban on cash rebates above £1 on new business from April 2014 while unit rebates were allowed to continue but with a tax charge applied.

It also banned all legacy payments between fund managers and platforms from April 2016 but did not stipulate whether it would ban cash rebates to clients on legacy business.

Responses to the latest consultation are due by 6 November.

Yellowtail Financial Planning managing director Dennis Hall says: “I assumed it would be the case that legacy cash rebates would be allowed to continue. For the regulator to have to clarify elements of a policy statement months after it is published is something that happens far too often.”

Where legacy cash rebates can continue: Click on table to view larger image

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