Platform RDR delay paves the way for further FSA compromise

After months of prevaricating over platform rebates post-Retail Distribution Review, the regulator finally blinked yesterday (27 June) and published a long-awaited regulatory missive on the issue.

Given the time taken to come to some kind of conclusion on the subject, the proposals were more than a tad underwhelming.

Dutifully we hacks reported on the confirmation that the Financial Services Authority is to ban cash rebates, having held its nerve in the face of intense lobbying from some segments of the sector.

We also highlighted the decision to allow unit rebates - a concession to those demanding some function for facilitating commercial arrangements between platforms and managers that benefit clients - and the potential extension of the proposals beyond the platform sector.

There was some debate, a degree of acrimony from some quarters, and a fair amount of foreboding over the potential consequences of widening the scope of the rebate ban. What was lacking, though, based on the responses from industry figures in my inbox, was any sense of surprise.

Many press releases, official statements and comments sent out responding to what was released suggested that there was little in the proposals that hadn’t been anticipated, much less anything truly shocking.

Why, then, it would be fair to ask, did it take the FSA so long to make up its mind? If the thinking on the issues did not change from that espoused a year ago and the consumer research on which the conclusions were based was completed in January - as the report date attests - surely there was little need to wait until just six months ahead of the RDR deadline to publish the consultation.

That it is a consultation and not a policy statement now means a further six month wait until the proposals are affirmed (assuming they are in their current form), meaning at the time of the RDR coming into force this key element of the rules will only just have been officially enshrined.

Advisers that are behind the curve on their own compliance with a set of rules they did not endorse are often castigated, being told they had five years to prepare and that their complaints therefore lack credibility. They may have a right to feel a touch aggrieved.

At least in this case the FSA has extended the deadline for platforms to meet the requirements for unit rebating until December 2013. This requirement will inevitably involve complex system changes for many and a 12-month extension is therefore a fair compromise from the regulator in light of its own dithering.

In truth, however, this may not be the last transitional arrangement the regulator is forced to acquiesce on.