Depending on the debate of the day, those with vested interests in protecting the (dismal) status quo have claimed that it will not be possible for IFAs to concentrate client assets on one or two platforms, that advisers will not be allowed to invest in platform businesses and that perhaps most absurdly of all, client outcomes will be enhanced if we limit transparency and constrain client choice.
Those rambling with a view to stalling progress have no idea how confusing this noise can be for those seeking to cut through the rhetoric and simply deliver great client outcomes.
The FSA’s recent publication of retail distribution review discussion paper 10/2 has gone a long way towards clarifying matters and accordingly I wholeheartedly welcome its publication.
Provided the discussion period is not hijacked we will be able to look forward to a future in which unbundling will be mandatory and platforms will be unable to profit by limiting choice.
While there will always be instances where bundled offerings are lower cost (as oft discussed on the Money Marketing blogs) the key point is that platforms will no longer be able to negotiate with fund managers to secure an advantage for the platform without the client and adviser being aware of this.
It is a fundamental tenet of consumerism that the client must be able to work out what is going on. It is therefore a fundamental responsibility of this industry to deliver unbundled transparent platforms.
It is now clearer than ever before that the FSA has no issue with advisers or IFA firms holding shares in a platform provided any conflict of interest is appropriately disclosed and managed – quite why this was ever an issue when no-one has ever even discussed advisers holding shares in life companies or asset managers is absolutely beyond me. It is refreshing to see such common sense from the FSA on this issue.
Similarly, the regulator has made it abundantly clear that advisers must have due regard for individual circumstances when recommending platform solutions – meaning that an adviser may find that one single platform does not meet the requirement of all of an adviser’s clients. It does not however mean that IFAs should actively seek to distribute clients’ assets across the entire platform market and beyond. In all likelihood most IFAs will find their client clustered around certain characteristics and as such I would expect a well run practice to work with perhaps one or two core platforms with other propositions (platform-led or not) picking up the slack.
The regulator has listened to the merchants of positive change and I for one urge the FSA to stick to its guns as the common sense that has emerged is a far more believable basis on which to build an industry.
All in all DP10/2 is wonderful news as it provides this industry with a framework in which it might finally shake off the shambles of the past and shift into a world where respect may be forged and a new found engagement with society carved out.
David Ferguson is chief executive officer of Nucleus.