FSA holds firm on cash rebates, allows unit rebates
Long-awaited platforms consultation paper confirms regulator plan to ban cash rebates but allow unit rebates.
The Financial Services Authority is standing by its plans to ban cash rebates to consumers from product providers in a long-awaited consultation paper published today (27 June), although it says it will allow rebates made through additional investment into the product, known as unit rebates.
In the consultation paper published today (27 June), the FSA said its thinking “has not changed” since the ban was proposed in a previous consultation paper.
The regulator stated: “The research we carried out supports the concerns we had identified with cash rebates.
“Our view is that cash rebates hinder transparency and potentially provide a mechanism for commission to continue being paid.”
Although the cash rebate ban will still take effect with the advent of the Retail Distribution Review in January 2013, platforms will have until 31 December 2013 to introduce the systems required for unit rebating because these are likely to be more complex.
The regulator is consulting on preventing platforms in both the advised and non-advised market from being funded by product providers through cash rebates. Platforms would only be remunerated through a platform charge agreed and paid by the consumer.
The regulator is also consulting on banning cash rebates from product providers to consumers using platforms on a non-advised basis.