Transact chief executive Ian Taylor has heralded the start of an RDR “war” with providers scrambling to buy distribution and advisers using their collective bargaining power to drive down fund management charges.
Speaking at the Institute of Financial Planning annual conference in Newport this morning, Taylor said: “It is like a war, we have this ancient empire of product providers going into war with the ancient empire of product distributors. We are reaching the end of the cold war of words in Canary Wharf. January is when the shooting begins.”
He said while there are advisers who see the appeal of remaining independent, there are a lot of advisers who realise that going restricted is a form of “regulatory insurance” under which advisers can group together for bargaining power.
He said fund managers are concerned about a future where restricted advisers club together to demand 50 basis point share classes.
Taylor said: “Life offices are probably faced with the most dramatic change of everyone. The life companies are more used to buying and controlling distribution than the asset managers and the platforms. So as we move into this brave new world, they are not going to give up easily.
“Life offices are already looking to control tied arrangements , to control advisers by buying them, and by pricing to them. They know they cannot give advisers money, but what they can do is reduce the price they give to their clients, so advisers can perhaps increase their own share of the charge.“
He added: “There is going to be a provider scramble to buy distribution. Everyone will say there is not, but in fact it has probably already started. These are the opening shots of the hot war. They will be buying up IFA firms left right and centre. “
Taylor also hit out at the FSA’s decision to ban cash rebates on platforms in favour of unit rebates. He reiterated his stance that platforms’ inability to recognise which units qualify for legacy commission and legacy commission rebates will cause “reconciliation chaos” unless the FSA retains cash rebates.
He added the FSA’s failure to work with the Government and HM Revenue & Customs on the tax implications of its platform rules, such as unit rebates, was “unforgivable”.