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Platform paper: Industry reaction


AJ Bell Marketing director Billy Mackay says: “The FCA’s sunset clause, which expires on 5 April 2016, provides a line in the sand for the end of legacy payments but, for many, it was happening anyway. There has been lots of talk about ‘clean’, ‘super-clean’ and even ‘industrial clean’. The simple fact is that larger platforms will negotiate terms and others will want those terms.”

Peter Mann

Skandia UK managing director Peter Mann: “The banning of retained rebates on legacy business was expected, and I am pleased to see they listened to our suggestion of a sunset clause on this, to allow the industry time for a smooth transition. The banning of cash rebates on legacy business was however a surprise to me and one which will no doubt cause wrap providers some issues.

“There is no doubt that this is a significant change to the platform market but change brings opportunity and there will be winners and losers. Our unbundled pricing model is already fully aligned to the new rules, we have a great range of investment solutions, we have the ability to flex prices down on funds and we are committed to the adviser market.  We feel this makes us ideally positioned to be one of the winners.”

Novia chief executive Bill Vasilieff says: “There are two items in the paper that will have a big impact on the market. The first is the ban on rebates for legacy business. This will have an enormous impact on the finances of the supermarkets that operate – or indeed have operated in the past – a bundled pricing model and it will be very interesting to see how they manage, or fail to manage this.

“The second, and possibly linked, item is that the FCA has decided to allow fund managers to pay platforms for certain services such as corporate actions and interestingly, advertising. We can expect to see a scramble by the bigger platforms for advertising revenue and once again it will be very interesting to see how platforms claiming to be independent whilst offering guided architecture will manage this potential conflict.”

Cofunds director of marketing Verona Smith says: “The sunset clause will be a challenge for everybody but we positioned ourselves well in correctly anticipating the direction the regulator was taking and structuring our business accordingly.

“The short-term pain will be felt across the board but the degree to which any platform suffers will heavily depend on the how far it has already embraced clean and transparent pricing. We saw the direction the regulator was taking and we committed our business to clean share classes back in 2011.”

Standard Life head of platform propositions David Tiller says: ”The general move to unbundling in the market and HMRC’s recent decision has to a large extent pre-empted today’s announcement from the FCA.  Our plans to fully unbundle wrap and move to clean share classes are already well advanced, and advisers’ transition to adviser charging is progressing well.  This means that we, and the advisers we deal with, do not need to change direction.” 


Nucleus chief executive David Ferguson says: ”The biggest impact is probably that platforms can no longer be paid by fund managers. The very good news is that this doesn’t just extend to new business but to all legacy business too. The ‘backstop’ for the former is April 2014 and for the latter is April 2016, or earlier if assets are switched around.

”This changes everything. It has started a race to the future and it is the more modern wrap sector which starts from the front. Having historically accumulated a load of legacy assets is historically interesting. The future is about service, price, functionality and service and not who we all had lunch with last week.”

Former Skandia head of investment marketing Graham Bentley says: ”Unit rebates are in, but Her Majesty’s Rebate Confiscation service has doomed that model, as customers will not want to complete tedious additional forms for their tax returns. Superclean may be more tempting for smaller fund groups who might be kicked off platforms otherwise. Bigger groups may have less to fear from platforms who dare not remove large groups’ presence on the platform, but can deliver no volume benefits.

“Cross-subsidy being banned will punish attempts at Guided Architecture, where platforms use internal asset management capability to offer own-fund discounts, thus obfuscating platform costs.”


Transact chief executive Ian Taylor says: ”Banning cash rebates to platform clients is a step backwards and consumers may suffer as a result. The ban follows from a rather discredited belief that cash rebates disguise the adviser’s and/or the platform’s own charges. In fact, cash rebates are essential for quick and flexible pricing and for fluid re-registration.

”Remember, not all funds will have clean share classes; clean share classes will not all be cheaper; and there are billions of “dirty” units in issue that will have to be converted if they are to be priced correctly. It is all about the operational detail.”


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