Cash rebate ban 'done deal' as FSA draws up final rules

The FSA has already decided final rules governing platforms ahead of publication of its policy paper in July and will “not budge” on the proposal to ban cash rebates.

It is understood the regulator will publish its long-awaited policy paper on July 28 when it will announce a ban on cash rebates after a successful lobbying effort by the ABI.

"We are led to believe we will see the platform paper at the back-end of July, subject to final approval by the FSA board," said Fidelity FundsNetwork head of fund partners Ed Dymott (pictured).

Earlier this month, IFAonline revealed the regulator was pushing back publication of the policy paper from Q2 to Q3 as it struggled to formulate final rules.

But it seems the watchdog has since decided upon most aspects of the policy paper. Talks between various platforms and wraps are now concentrating on the complexities surrounding unit reinvestments.

Nucleus CEO David Ferguson said it is now up to fund managers to decide how they will implement differential pricing.

"The ball is in the court of the fund managers," he said. "Platforms will have to wait and see how fund managers implement differential pricing. If they use different share classes, apart from dealing with the issue of legacy business, it is not that much for platforms to do. But if they go down the unit rebate road then there is more work to be done."

It is understood the ABI has been lobbying behind the scenes in support of a ban on cash rebates - an effort which appears to have drowned out the noise from platform players voicing their strong disapproval.  

"There are parts of the market which clearly have an issue with cash rebates - a number of insurers have come out and said they are against cash rebates and the FSA Consumer Panel is against cash rebates too," added Dymott. "Potentially some of these arguments have been heard more strongly than platforms and the IMA."

Nucleus CEO Ferguson said it is "alarming" if the ABI have played a part in persuading the regulator to proceed with its ban.

"There seems to be quite a lot of noise about the ABI having a big say in this," he said.

"I think it is an alarming day when the ABI has a significant voice on anything to do with transparency. It is the members of the ABI that created the opaque, commission-driven framework we have been operating in for the last thirty years."

A spokesperson from the ABI said: "The ABI has not been actively lobbying in favour of the cash rebate ban. Our response to the FSA's consultation did not take a position on this proposal and individual members put forward their own positions."