Platforms reject claims over two year RDR ‘grace period’
Major platforms tell Investment Adviser they will be able to meet FSA’s original post-RDR deadline.
Major platform providers have dismissed claims that they need two years’ grace period after the RDR is implemented to adapt their systems to the new rules.
The Tax Incentivised Savings Association (Tisa) last week said some of its members had raised concerns about how long it will take them to update their systems so they can facilitate RDR-style rebates from funds. After the RDR, these rebates will consist of fund units, rather than cash.
If it receives enough support from its members, the trade body is planning to lobby the FSA to increase by 12 months the time it will allow for platforms to make the necessary changes.
In its consultation paper on rebates, published in June, the regulator set a deadline of December 31 2013. Tisa members want this extended to December 31 2014. This means platforms would not have to comply with their own ‘RDR 2’ rules until 2015 – two years after advisers’ qualifications rules and the commission ban come in.
But major platforms last week told Investment Adviser that they believed they were able to meet the FSA’s original deadline.
Cofunds’ head of proposition Verona Smith said the company would “definitely” be ready before the FSA’s deadline and was “not concerned” about timescales.
Graeme Bold, Standard Life’s UK retail director for the RDR, said: “We’re working through finer detail and while we obviously need to wait for the final decision from the FSA, we are developing our plans to meet whatever the outcome may be by the  deadline.”
A spokesperson for Axa Wealth said its Elevate platform “operates a flexible model and will be able to administer rebates in any way the FSA finally decides”, but declined to comment on costs or timescales until the publication of final rules.
However, Mark Polson, founder of independent platform consultancy The Lang Cat, warned: “Some providers struggle to pay dividends on time. If the messaging between the fund manager, platform and client doesn’t match up now, imagine what will happen when they are getting thousands of messages a day for tiny amounts of money.”
Skandia has stood alone in its support of unit rebates, which it already allows on its platform.
Graham Bentley, head of proposition, said he would be “shocked” of platforms did not have “backup plans” to implement unit rebates, in spite of their heavy lobbying against a cash rebate ban.
He said: “There are clever and sensible people running these platforms so I cannot imagine they would not have a back-up plan [to bring in unit rebates]. I would be shocked if they did not.”
Wrap platforms such as Nucleus and Transact expect to build-in unit rebate facilities within three months of the rules being confirmed.