The FCA has told fund managers to expect a further clampdown on charges if they are seen to be profiting from the move to clean fee share classes.
In today’s final rules on payments to platforms the FCA set a final deadline of April 6 2016 after which all legacy commission and rebates will be banned.
The move has been widely expected and pre-empted by fund managers introducing clean fee share classes, stripping out both trail commission payments to advisers and payments to platforms.
But the FCA also said it was aware that the standard 0.75 per cent clean fee share class did not reflect the rebates previously paid to investors and so effectively meant funds were becoming more expensive.
“We have already expressed concerns with regard to pricing and competition in the asset management industry,” the FCA said.
“If a platform was able to negotiate, for example, a rebate of 90 basis points from a fund manager for a 150 basis points fund, then we would be concerned if the same deal would not be on offer to that platform when looking to add a clean share class, given that consumers will directly benefit from this negotiation.
“We do not expect these policy changes to be used as a reason by the industry to increase the fees they are able to receive.
“If we see the average total expense ratio across the industry increase as a result of these changes and the movement to clean share classes, this will add weight to the concerns we have around pricing and competition in this market.”
