The Retail Distribution Review (RDR) continues its progress (see Regulatory Roundup 32 for the most recent update) with the publication of PS11/9 ‘Platforms – Delivering the RDR and other issues for platforms and nominee-related services’.
Those impacted by the RDR will know that one feature will be the abolition of commission payments after 31 December 2012.
In this spirit the paper explains that the FSA believe that it would be ‘desirable, in principle’ to ban payments by product providers to platforms and, for advised sales, to ban cash rebates to consumers. However the FSA accepted that this could lead to unintended consequences and so plans to carry out further work before introducing any rules in this respect and will only say that any rules banning such payments will not come into force until after 31 December 2012.
The ban would only extend to cash payments so, for example, a rebate could be provided in the form of extra units, although the Regulator warns that the intention of the rebate is to allow platforms to pass on to clients negotiated discounts, or for fund managers to vary the level of charges, and would not expect firms to take the existing adviser commission built into products and simply rebate it back to the client in the form of additional units.
Other proposals on the table include imposing a requirement for platforms to allow assets to be re-registered off their platforms ‘within a reasonable time and in an efficient manner’ and for platforms (and any ‘intermediate unit holder’ – which will include all types of nominee companies) to pass on information provided by authorised fund managers such as reports and voting notifications received to the end investors.
