All legacy payments on past business between fund managers and platforms will be banned from 2016.
The Financial Conduct Authority’s platform policy statement, published last week, says a sunset clause of two years will be applied from 6 April 2014 to allow platforms to make the required changes to their business models.
The statement confirms the regulator’s ban on cash rebates and fund manager payments will apply to new business from 6 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.
Association of Professional Advisers policy director Chris Hannant says: “We fully support the FCA’s drive towards greater transparency. However, transparency is not an end in itself, it is a means to an end. Transparency should not be about the collection or publication of more and more data with no clear purpose.”