Cofunds: FSA platform policy is undermining RDR

The regulator has missed a vital opportunity to provide clarity over platform rules and its current “cluttered” policy risks undermining RDR, Cofunds has warned.

Speaking as part of a webcast last week, Cofunds sales and marketing director Alastair Conway (pictured) said the lack of clarity over legacy assets, coupled with the fact no date has been set for a ban on cash rebates, makes it "impossible" for platforms to plan ahead.

"On the two big areas (legacy and cash rebates) which have massive impacts on the ability of platforms to actually do some planning and some building to make sure everyone is ready on time...that opportunity has been missed and it is vital the regulator gets clarity to the market quickly."

In its platform policy paper published in August, the FSA delayed a ban on both cash rebates and fund manager rebates - pending more research - whilst guidance consultation on the fuzzy issue of legacy assets is expected within weeks.

Last month Cofunds unveiled its new unbundled pricing structure, set for launch in the middle of next year, in anticipation of an expected ban on fund manager rebates. The platform also requested fund managers issue a "completely clean" share class with a 0.75% AMC.

Whilst Conway said Cofunds took the decision in a bid to move into what it predicts will be the "end game" space as quickly as possible, he thinks the lack of clarity over if and when rebates will be banned could see the market splinter into different factions.

"These grey areas could end up with someone doing business in the area we operate in today, others doing business in this twilight world for a year, 18 months or maybe six months, and others doing business in the world of the future where all rebates have disappeared."

Such confusion risks serious customer detriment, warned Conway.

"I thought the purpose here was to make it easier for the end investor and yet we are cluttering them up with more information and more detail that is providing no value," he said.

"That will undermine some of the good elements of the RDR which is about getting good investor outcomes."

All three fund supermarkets have now unveiled plans to launch an unbundled pricing model. But in contrast to Cofunds, FundsNetwork and Skandia will not ask fund managers to issue a 75bps share class.