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FCA set to give fund groups waivers on platform rules

Tisa is in talks with the FCA over allowing waivers to fund groups inadvertently caught by the regulator’s platform definition.

Money Marketing sister publication Fundweb revealed last month Tisa was seeking clarification from the FCA over its platform definition after fund groups offering two or more fund ranges under a single Isa wrapper appeared to be defined as a platform by the latest rules.

The FCA defines a platform service as one which a) involves arranging, safeguarding and administering asset investments, and b) distributes retail investment products which are offered to retail clients by more than one product provider but is neither c) solely paid for by adviser charges nor d) ancillary to the activity of managing investments for the retail client.

As the wording stands, this would include any fund group which offers more than one fund range underneath its own Isa wrapper. This involves fund houses which have made acquisitions and run funds administered by different authorised corporate directors.

Following discussions, the FCA looks set to offer waivers to firms where it seems appropriate. Tisa has asked the groups affected to set out in writing why they should not be caught by the platform definition for FCA approval. 

If a fund group were defined as a platform, it would mean adhering to different capital adequacy rules and would place restrictions on how money was transferred within the business due to the ban on payments between fund managers and platforms.

An FCA spokesman says: “We have not been asked for individual or general waivers on this issue but firms wishing to apply for one would need to demonstrate that complying with the rule would be unduly burdensome or would not achieve its purpose and the waiver would not adversely affect any of our operational objectives.”

Investment Management Association senior adviser, retail distribution Mike Gould says: “The FCA definition of platform service could catch some firms that are not the real target of the rules, such as certain Isa managers. 

“We expect fund managers in this position to follow the waiver process set out in FCA rules and on its website to avoid having to comply with specific regulatory requirements that would not be appropriate.” 

Tisa technical director Jeffrey Mushens says: “The FCA seems open to achieving the right outcome.”

Adviser views


Thomas and Thomas Financial Services managing director Darren Lloyd Thomas

This sounds like a sensible move as there are always some firms that will be drawn in accidentally and the FCA understands that. It feels like a completely different regulator from the FSA as it seems to be showing a lot more pragmatism towards the industry.


Capital Asset Management chief executive Alan Smith

It is one of the many unintended consequences with the new regulatory regime. Everyone is still getting used to the new rules and some pragmatism from the regulator is welcome. This seems a better way of going about things as opposed to ripping up the rulebook and starting again.


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