The Financial Conduct Authority is set to clarify that its sunset clause on legacy cash rebates to platforms will not cover payments to “retail clients”, which will be allowed to continue “indefinitely”.
In a note sent to trade bodies, seen by FTAdviser, the FCA said that it will be publishing further clarification due to the “queries” it has received since publishing its policy statement in April.
According to the note, the new guidance will set out in more detail its “policy intention” that legacy cash rebates can continue indefinitely, unless there is a change to the legacy investment on or after 6 April 2014 that requires the investment to be wholly or partly placed in funds which do not allow for cash rebates.
The FCA said such “disturbance” would include “a fund switch involving the sale of all or part of the investment and purchase of different funds”.
The regulator’s platform policy revealed the FCA’s plans to ban cash rebates from April 2014, with all legacy business also required to move away from rebates after a further two-year grace period ending in April 2016.
After a two-year grace, all business will have to move to a platform charge structure for both new and existing business. The clarification will mean this applies only to the platform element of the rebate.
’De minimis’ cash rebates of £1 or less per unit will continue to be allowed, as had been previously reported by FTAdviser in February.
The regulator intends to consult on draft guidance in its September Quarterly Consultation Paper.
