In its latest RDR paper, the FSA says it is consulting on placing specific responsibilities on product providers which offer facilities for deducting adviser charges from investments.
These would include offering reasonable flexibility of charges, validating and monitoring adviser charges and matching payments deducted from consu-mers with payments passed to adviser firms.
Investec managing director for UK distribution David Aird says it is going to be tough for providers to fulfil these responsibilities, especially if wrap platforms form part of the charging process. He says: “These responsibilities on providers will seriously affect procedure. It is particularly difficult when deals are intermediated by a platform.”
Henderson New Star technical director Stewart Cazier believes providers will struggle to oversee charges, however they are paid, but the use of a platforms may add more problems.
He says: “There is a list of reasons a mile high as to why advisers can add an additional charge to a product. It will be hard to monitor. Providers cannot just pitch up to adviser firms and ask all these questions.”
Gartmore head of UK retail Richard Pursglove says greater clarity is needed as soon as possible. “The FSA’s paper on platforms is needed sooner rather than later,” he says.
Hargreaves Lansdown compliance director Nigel Bence is concerned that the FSA proposals amount to self-regulation.
He says: “How do you know if an adviser fee is excessive? Platforms add another link to the chain. Providers will find it particularly hard to monitor charges where a block purchase is made in a nominee’s name. I think that they will resist the proposals.”