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Platforms protest at FSA rules on fund information

Transact, Ascentric and Cofunds have hit out at new FSA rules that require platforms to send detailed fund information to advised investors, insisting it is up to IFAs to provide clients with any relevant information.

In its policy statement, published in August, the regulator stipulated that from January 1, 2013 platforms will be required to provide advised and non-advised investors with the information and notifications they receive from fund managers and depositaries about any changes to their investments.

The information can be sent electronically but where that is not possible it must be sent by post. Clients are not allowed to opt out.

Ascentric managing director Hugo Thorman says many clients use an IFA so they do not have to digest large volumes of information about their investments.

He says: “The FSA finds it hard to believe that clients employ advisers so they do not have to sift through this information. Even if a client explicitly says they do not want this inform- ation, we will still have to send it to them.”

Transact managing director Ian Taylor (pictured) has questioned the need for platforms to send the information to clients.

He says: “There is no evidence that clients want this inform- ation from platforms. Perhaps they are getting it from their adviser, perhaps they do not want it at all. They certainly do not ask us for it.”

Cofunds chief executive Martin Davis says: “It is not the type of information advisers are telling us their clients want. If an adviser has a good relationship with their clients, they should be disseminating this inform- ation to those who want it.”

Seven Investment Management marketing director Justin Urquhart Stewart says: “This could become a very significant industry cost, especially with regard to platforms that operate on thin margins.

“I think the FSA has misunderstood the concept of how things work and it should be supporting advisers, not bypassing them.”

An FSA spokeswoman says: “The same information should be provided to both direct investors and those who invest through an advised process.”


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There are 10 comments at the moment, we would love to hear your opinion too.

  1. Just another illustration of ” How the FSA is out of touch”
    They are ruining the industry with their rules.
    Is this another example of incompetance from a regulator in the throws of death.

  2. Michael Wainwright 19th April 2012 at 10:35 am

    IFAs use my services as a Compliance Consultant partly so that they do not have to read all the information that comes from the FSA and other sources.

    I use the services of an IFA partly because I do not want to receive or have to read all the paperwork that providers are forced to send out.

    I and millions like me will not read this new lot of information. I will not want it to arrive electronically and the paper will go straight in the bin. So the FSA will be contributing to the waste of the world’s resources, not to mention the addition cost to providers which will reduce my profits.

    Perhaps the providers should survey their clients so that they have some concrete evidence to give the FSA – not of course that it will take the slightest notice.

    Makes my blood boil!

  3. I’m convinced that no one at the FSA is an investor. Perhaps it’s forbidden?!

  4. Justin Credible 19th April 2012 at 10:53 am

    Just more regulation and more cost for absolutely no benefit whatsoever to anyone at all. Sadly the FSA have no idea how advisers work, platforms work and most importantly what consumers want. As individuals it is highly unlikely that they have ever given or sought financial advice and so know precious little about it.

    Consumers will not read this information, they do not want it and many of my clients will simply be angry at the wastage – of course they will understand that it has been foisted on them by the regulator. Many will be angry that they are obviously paying for it.

    When was the last time anyone at the FSA read the T&Cs of their current account or the reams of info next to a parking meter in a pay and display car park. When will they even conduct some ‘simple simon’ common sense cost benefit analysis to anything that dream up? Never I guess.

    The next step will be that we will have to regurgitate the info in a fifty page suitability report. I already produce two – one for the client / compliance purposes (which is normally only read by me and gathers dust in the client’s boxfile of other destroyed trees) and one abridged version with discussion documents produced along the way that is actually read and understood to ensure the client understands and is happy with the process (isn’t that what it is all about?)

  5. As in all things the FSA imposes on us and the providers, it doesn’t make sense and is inappropriate to the needs of investors. This sort of info is best provided by an adviser simply because they are the agents of the client, they make the recommendations and they get paid for it.

    Why burden platforms with such nonsense ?

    Truly RDR has now become something it was never meant to be.

    How can bombarding investors with voluminous documentation, which on analysis, they very rarely read be of use to providing better outcomes.

    These guys have really lost the plot now and are simply putting in place rules which bear no relevance to the needs of consumers and just perpetuate this inadequate and failed system into perpetuity.

  6. I spend too much time having clients bringing this sort of ‘rubbish’ with them at the annual review. Most the time it is not even opened as they rely on us a their IFA to review the investments.and advise accordingly.

    Regulators are so far removed from clients these days I often wonder who tells them what is a good or bad idea. Most issues like this offer little practical use attatched to them.

    Our ethical clients already think the FS industry destroys more rain forests than anyone else. Guess this will reinforce that view.

  7. This is going to be tedious. I remember in the early 2,000’s before we used platforms and all clients held their investments directly the pain in the backside it was whenever the fund houses sent them the legalise documentation relating to the running of the fund. The worst of these were when firms converted from Unit Trusts to OEICS and an in depth explanation was required that was effectively “a few things have changed around the workings of the funds but nothing that wil effect you”.

  8. This is all about not been sued if it is issued to the client the client can not say they did not receive it. Therefore they can not sue ! can not see what the fuss is about.

  9. Naturally, no-one wishes to see compliance-generated rubbish being sent out without any benefit to the client.

    However, if this relates to ‘corporate actions’ (ie, restructuring of shares/funds, share issues, etc, which often require express client response), then it is wholly appropriate that platforms have an obligation to pass this information to the client (copied to their adviser) in a timely manner.

  10. Asking a bureaucrat not to stop printing paper is akin to asking a river to stop flowing.


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