Platforms fear ‘second RDR’ over cash rebates
Fears are growing among fund platforms that a “second RDR” would be necessary to implement the FSA’s proposed ban on cash rebates from fund managers.
In its Retail Conduct Risk Outlook paper published in March, the FSA said it would publish a consultation on final platform rules by the end of that month, but it has given no indication of when this will be.
Ed Dymott, head of commercial at Fidelity FundsNetwork, said: “The FSA has said it will publish as and when it is ready, which suggests not soon. The question that leaves is how long to wait – there are a lot of people waiting to make decisions.
“We know the FSA will give plenty of time for platforms to make changes, so it will go beyond the RDR deadline [January 1 2013]. It will take 12-18 months to implement some changes.”
Bill Vasilieff, chief executive of Novia, said the issue of rebates and the delay to the platform paper meant there was “bound to be a second RDR”.
“If you have two significant items being delayed, there’s bound to be a second phase,” he said. “It’s quite frustrating that its being delayed [after years] because it appears it hasn’t been thought through fully.”
Avalon director Harry Kerr said the potential “second RDR” showed the FSA “doesn’t understand platforms as well as they thought they did a year or two ago”. He added that delaying the paper would help alleviate the possibility of the FSA having to backtrack on its policy in the future, as the regulator had been “going in circles” around the rebates issue.
Transact head of marketing Malcolm Murray agreed there was an “increased possibility” of a delay, but said he was still working on the basis that the FSA would not budge from its current timeline.
Graham Bentley, head of proposition at Skandia, said: “We operate within the framework the FSA gives us. They may well say they don’t care that it is six months to the RDR deadline, but I would hope they allow a sensible transition period.”
Last week it emerged the FSA was considering delaying requirements for platforms to inform all clients about changes to their investments. This would allow time for further research into the issue, which has riled some platforms.
Mr Dymott said the proposals could cause a “significant uplift” in costs to platforms without any benefit for consumers.