The Tax Incentivised Savings Association is urging the FSA to rethink its proposed ban on rebates in the wrap and platform market.
In its response to the FSA discussion paper on platforms, Tisa says disclosure outcomes, which meet the FSA’s requirement for transparency of platform charges can be delivered without imposing an outright ban on rebates.
Director of portfolio and retirement planning Malcolm Small says the FSA’s approach is “fraught with potential unintended consequences”.
He says: “While there are some practices that may be considered undesirable, I am concerned that the proposed regulatory approach is fraught with potential unintended consequences. The FSA has made considerable efforts and this discussion paper displays a thorough understanding of the wrap and platform market and the issues within it.
“However, its directions of travel give us cause for concern. I hope that we can work proactively with the FSA to address these concerns.”
Tisa says a ban on rebates from fund managers to providers and from platforms to consumers would “strike at the heart” of legitimate operating models and pricing structures.
It adds that the possible ban on rebates is not matched by proposals to restrict such payments from fund managers to life and pension fund firms.
Tisa also says the focus on rebates for advised business rather than execution-only creates an unlevel playing field as platforms will have to operate two different models.
Nucleus says it does not see the merit in preventing asset managers from rebating overcharges in the unit/share price to clients as this would lead to higher charges for asset managers and may lead to weaker cashflow within client cash accounts, in turn resulting in a requirement for units/shares to be redeemed to meet platform and adviser fees.
But Nucleus welcomes the FSA’s stance on remuneration, particularly in relation to shelf-space fees, guided architecture and interest on cash deposits and believes there is “no rationale” in treating non-advised sales differently to advised sales.
Chief executive and founder David Ferguson says the FSA should “stick to its guns”.
He says: “We applaud the FSA’s conviction, particularly in relation to re-registration, unbundling of charges and commission payments, which we expect to have a positive impact on consumer understanding and engagement. We would strongly urge the FSA to stick to its guns and not be swayed in the run-up to 2012.”