Platforms given fortnight to complete cash rebate survey

The FSA gave platforms just two weeks to respond to an operational questionnaire which will be key in helping the regulator decide whether to pursue its controversial plan to ban cash rebates.

The questionnaire was sent to platforms on 25 March to gain further insight into how proposals set out in consultation paper CP 10/29 will impact their businesses.

But with a deadline of 8 April, platforms only had a fortnight to structure their responses to several proposals, including the thorny issue of cash rebates.

Platform players which originally sent a submission to the FSA setting out its opposition to a cash rebate ban again replied to the regulator's questionnaire last Friday.

According to one industry figure, a number of platforms said in no uncertain terms the regulator needs to take on board the platform community's concerns.

"They essentially said we were less than thrilled at the proposals and you guys really need to listen."

They are understood to be concerned the FSA has not taken on board, or does not understand, its concerns surrounding the proposed cash rebate ban.

In its questionnaire, the regulator asks if firms would prefer to rebate consumers in units or via products carrying no consumer rebate.

It also asks platforms to explain how a business model adopting unit rebates would operate and whether it would be more cost-effective to receive a cash payment from fund managers and purchase additional units for consumers or receive additional units from fund managers.

The FSA also asked if the selling of products carrying unit rebates would incur any one-off or ongoing costs.

One suggestion put to the FSA was to allow cash rebates up to a de minimis limit and the regulator has asked respondents what would be an appropriate limit.

Another suggestion is that of a "segregated" cash account, separate to an adviser charges account, operating according to consumer instructions.

The FSA says it will use feedback from the questionnaire when considering its final rules following CP 10/29 - something it hopes to compile in Q2.

Meanwhile the UK Platform Group, which originally provided a joint response to CP 10/29, says the FSA has consulted it on follow-up to the paper.

"While we did raise concerns over the client impact of rebates, we are more concerned that, with 20 months to go, the most critical element of RDR has not been decided," says chair of the UK Platform Group Stephen Mohan.

"Until there is clarity over when legacy assets become new world, nobody can be certain to deliver RDR."

The regulator's proposal to ban cash rebates was met with widespread disapproval from the industry who warned of unintended consequences, additional complexity and consumer detriment.

Skandia was the only platform to support the FSA's proposed ban.