The latest paper from the FSA on legacy assets contains what are quite straight-forward proposals, essentially stating that whenever there is a non-contractual increase on a contract, then that increase falls into the new adviser-charging regime if advice is given.
The paper has met with howls of protest from various industry parties with vested interests. One example is the Association of British Insurers stating the rules will create a bias away from top-ups to existing policies into a new policy (due to system constraints) which will lead to consumer detriment. I suggest that the consumer detriment will be caused more by the original product design than anything else.
The most irritating comment I read came from one of the big three fund supermarkets. These organisations have accepted billions of pounds of re-registered assets on to their platforms for years but have consistently blocked re-registration away. Most other platforms have taken a customer-friendly approach and allowed clients to re-register away if they wanted to do so.
The reason given for this stance by the supermarkets has been a lack of systems to facilitate the re-registration process but consider the following:
- The amount of work in re-registering assets on to the platform is the same as re-registering off.
- Cofunds used to re-register assets off but changed this stance a few years ago, presumably for commercial reasons.
- A couple of years ago, Skandia stated it was going to allow re-registration off but then changed its mind.
What really irritates me is the claim by one of these supermarket’s spokesmen last week that “the FSA’s stance on legacy assets could derail efforts to implement platform-to-platform re-registration in time for the retail distribution review” and that the platform sector had previously been moving steadily towards implementing re-registration.
The supermarkets were always planning to allow re-registration at the last possible date. The FSA stated, I think in 2010, that the industry should get on with it and allow re-registration between platforms and that they would make it mandatory from the end of 2012. We still do not have re-registration off those supermarkets. The constant bleating about system constraints does not wash, they could do it whenever they wish.
If I were at the FSA, I would treat these reported comments above as they deserve to be treated and just completely ignore them.
Bill Vasilieff is chief executive of Novia