Transact will pay all fund manager rebates to clients as units into money market and gilt funds from 1 April.
Fundweb revealed yesterday that the FCA will allow unit rebates from platforms to be paid to clients in units of any fund they choose regardless of what fund they were originally invested in.
The decision on which fund the unit rebate is paid back in could also be made by the platform dependant on their client terms and conditions.
The move throws the ban on cash rebates into question as unit rebates will be allowed to be paid back into cash funds.
Ahead of the clarification from the FCA, Transact sent an email to clients last week explaining that from 1 April all unit rebates will be passed on to clients in units of gilt funds for Isas or money market funds for all other accounts.
Transact refers to these as rebate reinvestment funds. Where cash is needed to pay the platform fee, units in these will be sold first to cover the fee.
It says the decision was made as the platform felt that allowing clients to choose which funds to invest the unit rebates in would add unnecessary complexity.
Cash rebates to clients are banned on new business from April but can continue on legacy business.
Unit rebates are permitted but subject to income tax where they sit outside a tax wrapper.
Transact chief development officer Jonathan Gunby says: “Our approach is to do something simple to understand and which minimises the tax implications for the client.”