All legacy payments on past business between fund managers and platforms are to be banned by 2016, the FCA has confirmed today.
In its platform policy statement published this morning, the regulator said a sunset clause of two years would be applied from April 2014 to allow platforms to make the required changes to their business models.
The statement confirmed the regulator’s ban on cash rebates and fund manager payments on new business from April 2014. De minimis cash rebates of £1 will be permitted but a tax charge will apply.
The regulator says rebates can be passed from the fund manager to the platform in cash as long as they are passed back to the customer in units.
Unit rebates will be allowed to continue also with a tax charge following the HMRC announcement last month.
The regulator says: ”The FCA is making changes to ensure that investors can make fully informed choices if they wish to use a platform and understand what they are paying for the service the platform provides.
”At the end of a two year transition period platforms will have to charge customers a platform charge for both new and existing business.”
Certain payments between fund managers and platforms will be allowed where the platform has incurred one-off costs relating to correcting pricing errors, corporate actions and giving feedback.
Advertising payments between fund managers and platforms will also be allowed to continue, although the FCA says this should not be used to influence business.
All rules apply to both advised and non-advised platforms.
The FCA is currently considering whether to extend the rules to Sipp providers and life companies, saying it will consult on this in the future.
In its June 2012 consultation paper, the regulator confirmed it was pushing ahead with plans to ban fund manager payments to platforms and cash rebates.
The FSA initially said it wanted to ban fund manager payments to platforms, then in November 2010 changed its mind and announced a proposal to ban cash rebates instead. In August 2011, the FSA said it was “desirable in principle” to ban all rebates, but said further research was needed to assess the impact of a ban on consumers.
The regulator delayed the publication of this final policy statement in the second half of last year over HMRC concerns over the tax treatment of rebates.