The FCA’s new rules on platform charging are not clear enough and could lead to additional charges being levied on clients, an adviser has warned.
Martin Dodd, senior partner of Wolverhampton-based Midlands Investment Agency, said an unintentional consequence of the FCA’s platform paper was that additional charges on products, such as bonds, could be imposed if a client or adviser instigated a move to unbundled charging.
The FCA’s platform paper was published in April and it confirmed a ban on platform rebates by product providers from next April to ensure a transition to transparent, unbundled charging.
Mr Dodd said he had received no guidance from platforms on the implications of the move to unbundled charging, and felt the advisory community had been “railroaded” into moving to unbundled structures.
He added: “One product provider’s literature intimates that a chargeable event is incurred when charging is transferred to unbundled. It may just be their interpretation and not a definitive answer, but this underlines the problem: no definitive answers.
“I feel that the subject has just been handed over to the IFA community to make a decision, while the platforms have said: ‘decide for yourself’.”
Mr Dodd said he felt that advisers were straying away from financial planning and deciding on a bundled or unbundled charging structure had nothing to do with planning. He said he believed the industry should be more helpful.
An FCA spokesman said the process of unbundling depended on the individual’s situation and their platform’s policy.
If the platform was moving to an unbundled structure the client would not incur a cost.
However if the platform was not transitioning to an unbundled structure and the client or adviser requested it, a charge would be incurred.