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FSA backs down on platform rebate ban after lobbying
18 August 2010
The Financial Services Authority (FSA) has succumbed to the lobbying of the UK’s largest platforms and is planning to back down on its proposal to ban unbundled charging structures. A source close to the regulator said there had been a ‘weakening across the board at the FSA’ following ‘phenomenal lobbying’ from the UK Platform Group, which includes Fidelity FundsNetwork, Skandia, Cofunds, Standard Life and Hargreaves Lansdown. The FSA was due to publish its response to its March discussion paper on platforms, which proposed abolishing fund rebates, in September. However, the paper has been pushed back to mid-October due to the change of heart over rebates. The pressure on the regulator has grown since March, with platforms airing concerns about the increasing cost and administrative burden of issuing a number of share classes to cope with the ban on rebates. Cofunds has said unbundling charges will confuse clients and drive up costs because fund managers will be able to set standard charges and platforms will not be able to negotiate them down. Gary Shaughnessy (pictured), UK managing director of Fidelity International, said: ‘We know the consultation paper has been put back to mid-October and we take that as an indication that the FSA recognises this is a really complex area and they have listened to arguments on both sides.’ The source said there would be a ‘foggy compromise’ in which adviser remuneration would be stripped out of the overall platform charge to keep in line with the FSA’s adviser charging rules. But they criticised the regulator for changing its stance. ‘If the FSA goes through with this compromise then it will look stupid. You can see how much the retail distribution review has unravelled, they have moved back on a number of things,’ said the source. Caroline Hawkesley, co-director at Evolve Financial Planning, said the move was surprising and that charging needs to be transparent. ‘It needs to be easy for the client to understand and unbundled charging helps us to explain to the client what they are being charged,’ she said. Published by CityWire
