The FSA is warning that wrap should not be used as a smokescreen to take more commission without offering additional services or to get round the checks that networks place on advisers.
Speaking at the recent Pep and Isa Managers’ Association conference in London, FSA asset management sector team manager Bruce Robson said these type of approaches show some advisers do not think seriously about treating customers fairly or take responsibility for their own compliance in the absence of detailed rules.
Robson said a platform could in some instances be “a smokescreen to disguise what is just another device for taking money off clients through the intermediation of yet another structure in the value chain”.
He said the FSA will be looking to ensure adequate disclosure, easy-to-understand charges and checks on adviser independence.
Robson said the issue of independence has been of particular concern recently, highlighting recent FSA guidance that advisers cannot rely on a restricted selection of products on a platform and call themselves independent.
He said platform providers need to be conscious of this issue when they decide which products advisers will want access to.
He pointed out that the FSA has seen positive examples of advisers’ use of platforms and sees wrap as a potential way of solving some of the problems of distribution highlighted recently by Callum McCarthy.
Robson said the FSA will be looking at ways to improve the regulatory environment for those advisers using platforms and will be asking for industry input.
He said: “It is depressing to read in the trade press that some firms see these platforms as a way of taking more commission without offering additional services or even circumventing checks that networks put in place.”