Platforms have warned the FSA’s decision to class re-registration as a non-advised process, therefore allowing legacy commission to continue being paid after the fund switch, could scupper the re-registration process.
In its November consultation paper on the treatment of legacy assets under the RDR, the FSA said it would press ahead with its ban on legacy commission but listed a number of non-advised sales routes, including re-registration, where it could continue.
But Cofunds says re-registering assets which are part legacy-eligible and part “new world” creates a problem because the re-registration standards have no way of recognising which part of an investment is eligible for legacy and which is not.
Cofunds managing director (operational services) Stephen Mohan (pictured) says: “The standard did not envisage different treatments of the same instrument, so the receiving platform cannot tell what to do with any 150bps fund it receives. For businesses expecting to do hundreds of these a day, this is impossible and it can only be detrimental to customers. The simplest but least likely solution is for the FSA to make re-registration a legacy disturbing activity.”
Ascentric managing director Hugo Thorman (pictured) says: “I think the FSA will revisit this stance on legacy commission and change re-registration to an advised process because I do not believe it has understood the implications. Re-registration is something which requires advice.”
Fidelity FundsNetwork head of commercial Ed Dymott says: “For the FSA to say re-registration between platforms is not advised sends out the wrong message to the industry and is in conflict with the work done by the industry and the Tax Incentivised Savings Association on re-registration. We hope that the FSA sees sense and changes this stance.”