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FSA: Preferred platform deals could fall foul of the RDR


Some preferred platform deals between distribution firms and platform providers could be in breach of RDR adviser-charging rules, according to the FSA.

Speaking at The Platforum’s adviser roadshow last week, FSA technical specialist Rory Percival (pictured) said some deals would fall foul of the rules to be implemented on January 1, 2013.

Percival says: “This is an area of interest to us. We have suspicions about certain arrangements between platforms and distributor firms or adviser firms that do appear to be or will be in breach of adviser-charging rules come next year.”

He added that particular remuneration arrangements are attracting attention from the FSA.

He said: “We do not have any concerns about firms negotiating lower charges for customers. There are some arrangements where the firm is receiving remuneration from the platform and, depending on the nature of that remuneration, it is possibly in breach of the charging rules.”

In its platform policy statement, published in August, the FSA said: “The adviser needs to take into account whether being on a platform is in each individual client’s best interests and ensure any personal recommendation to invest via a platform is suitable.”

The Lang Cat principal Mark Polson says: “It is important the FSA looks at these deals to ensure adviser firms are making money through adviser-charging and that alone. These kind of deals show a clear conflict of interest that needs to be managed.”

Many networks and other big distributors have preferred platform arrangements in place.


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There are 20 comments at the moment, we would love to hear your opinion too.

  1. It seems a number of providers feel they have a good chance of avoiding the principals of RDR (improved customer outcomes) by re-introducing the smoke and mirrors with under the counter not disclosed kick backs.

    Sales Incentives including Providers like True Potential who set up opaque trusts to pay kick backs based on sales production levels are clearly in breach of RDR and a real concern that we are moving backwards not forwards.

    If your product is of a good standard people will naturally use it. If you need inducements then you really should consider spending that money on improving your offering for clients not salesforce benefit.

  2. It’s hardly surprising providers are thinking of ways round RDR because it is astonishing that this invention of someone’s brain in 2006 has got so close to implementation. I said it in 2006 and I will say it again 6 years later – it will destroy the financial services industry as we know it. Already it has the reek of a corpse about it…

  3. Great comment above, completely agree.

  4. True Potential backtracked on their adviser GBES and replaced it with an exit strategy which was only possible by placing all of your clients on to the TP platform. The exit value is a multiple of funds placed on the platform. A clear conflict of interests.

  5. Just stop threatening us and shut the whole industry down. The proliferation of people guiding us will eventually mean that there is no one left to be guided.

  6. Not sure whether this is relevant but anyone read the FSA guidance on whether “RDR is your firm on Track” under the heading “Fees and Business Models” the first point is :- “Have you considered with which clients you want to continue providing advice” – need I say any more about the outcome of RDR!!

  7. And the FSA (and IFAs) should be concerned about the threat to our independence of such exclusive deals.

  8. Destroying the ‘financial services industry’ is long over due!

    Long live the ‘financial planning profession’.

    if your only in it for the money then double glazing may be a better fit…..

  9. Anon @ 10.22am

    You show me an accountant, solicitor, architect, any other profession come to that whos not in it for the money.

    The overwelming majority (about 90% I am led to believe) of complaints against professions are about what they charge not what they advise


  10. Anon @ 10.22
    What’s in it for you
    or are you, like Hector? Just giving something back?

  11. given it is client money you have to say it makes sense to know whether prices are being “loaded” to get around the rules.

  12. @Anonymous 10.22: “over due” should be one word “overdue”. “your” should be “you’re”. Also, sentences start with a capital letter.

  13. So anonymous at 10.22, how do you pay your bills? Oh by charging for the work you do!
    If you feel that strongly about being paid for a job go work for a charity for nothing.

  14. I wished people above would stop complaining about RDR!!

    Yes it’s a challenge and our business models will have to change, and to a certain extent for the better.

    I for one support the raising of standards and indeed the raising of qualifications even if that sees a number of people leaving the industry. Financial advisers need to be seen as a real profession we can all be proud of rather than the dodgy miss-selling scandals that we have had in the past.

    I also like the move towards adviser charging structures particularly as advisers may be able to force provider charges downwards overtime; after all it is the adviser who really controls the flow of money into managed funds as we make the recommendation.

    Never been able to work out how fund managers can charge 1.5% with 0.5e going to the n and 0.25% going to platform and 0.75 as a minimum being kept by the fund manager.

    Fund managers are going to be desperate to attract money into their funds and therefore they may have to slash prices to attract IFA recommendations as well as improving fund performance.

    So instead of looking at RDR always from a bleak view point maybe it’s time to start looking at the opportunities and look at ways of innovating your business.

    Suspect I’m going to get one hell of a backlash from those comments lol

  15. David Greenall 18th May 2012 at 12:06 pm

    Providers are being forced into financial arrangements to be on panels otherwise they will be excluded. It’s not a one way street

  16. RDR is long overdue.

    I make no apology for the fact industry salesmen will be forced to come clean over whats in it for them.

    I make no apology that your monthly golf outing and exec box match tickets will cease.

    Again no apology for the free lunches or luxury cruise…..

    These are not FREE and clients should be told what they are paying for and why you really are recommending that bond form abc insurance co.

  17. Back to the article…

    Well done Rory. The FSA needs to stamp on this now, before it is too late.

    If anyone wants to name and shame anyone other than True Potential then please do. Our firends at the FSA would love to know who he should be calling to ask those ackward questions.

  18. Just stop this right now.

    Look at yourselves

    This infighting is doing (all) our cause no good at all.

    If the greedy advisers keep thinking that if they get rid of more of their adviser colleagues by putting them down they will benefit from it. They are Wrong !

    There wont be a big enough industry to make it worthwhile supporting.

    There are people in our industry who are wanting this to happen and laughing at this divide and conquer game.

    You are playing into their hands.

    Just stop playing their game, its our industry lets take back control of it.

  19. @ Anonymous 12.22: Between “fact” and “industry” the word “that” would improve the sentence. “Whats” needs an apostrophe because it is an abbreviation of “What is”. In the last sentence “form” should read “from”.

  20. RDR Brou-haa-haa from a bunch of city la di das

    They couldn’t find their bottom with both hands, a map, a compass and a travel guide and a Sherpa to guide them let alone come with a set of cogent rules and regulations.

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