FCA publishes policy statement PS 13/1 on platform service providers and rebate payments - .PDF file.
Following the Financial Services Authority’s (FSA) June 2012 consultation paper, the Financial Conduct Authority (FCA), assuming responsibility for publishing the rules from its predecessor, has published its policy statement addressing payments from product providers, such as fund managers, to platform service providers and consumers. In summary, platform services must be funded using charges disclosed to end investors with a ban on payments from product providers to platform service providers and on product providers rebating platform charges to consumers.
In summary, platform services must be funded using charges disclosed to end investors with a ban on payments from product providers to platform service providers and on product providers rebating platform charges to consumers. This will require significant changes to established practice in the retail funds industry, however, the Policy Statement is long awaited and comes as little surprise to market players.
This Policy Statement has been described by some market commentators as the “final piece in the jigsaw” of the FSA’s Retail Distribution Review (RDR). The RDR has the broad objective of limiting any negative influence product providers may have on product distribution and aligning the interests of intermediaries, such as platform providers, with the interests of clients. This includes banning any arrangements that could be analogous to commission payments. Platforms that currently have non-transparent funding arrangements with product providers may also favour certain products over others in terms of distribution. The FCA therefore hopes that banning such arrangements will encourage competition in the market by de-incentivising the relationship between platform service providers and product providers and providing investors with more choice…
If you are registered and logged in to the site, click on the link below to read the rest of the DLA Piper briefing. If not, please register or sign in with your details below.