Thorman: Ownership vital in platform due diligence

Advisers should consider the ownership of a platform when doing their due diligence as foreign-owned platforms are historically more likely to pull out of the market, according to Ascentric managing director Hugo Thorman.

Speaking at their annual conference in London on Monday, Thorman [pictured] said it was "amazing" that platforms were still being launched in an already-crowded market.

"Firms that are not making money or can't a see a way to make money won't be around post-RDR," he said. "You can't sustain it forever."

UK-based platforms may "stick around" for longer, he said, but advisers using foreign-owned platforms should think very carefully about the implications when doing their due-diligence.

The Raymond James platform, which has £2.38bn of assets under management for 64 registered firms, is wholly owned by Raymond James Financial Inc, a US-based company.

French-owned AXA has also invested heavily in its Elevate platform. A spokesperson said international diversification is "a key element" of the group's strategy, but said it remained "fully committed" to the UK market.

Thorman pointed to American Express and Macquarie as examples of foreign-owned platforms that abruptly exited the market. AmEx stopped accepting new business in 2006, while Macquarie closed last November after just 20 months.

"These are not small businesses, but they couldn't see a way to make money," he said. CitiBank entering the market by buying Scottish Friendly this month was "an interesting development", and something advisers should watch closely, he said.

Thorman said IFAs would face "a horrendous time" when the FSA rule on the validity of cash rebates.

He anticipates rebates will be banned, with advisers faced with an increase in bureaucracy if the FSA favours unit rebates.

"Most platforms who use advisers charging have argued very strongly against unit rebates," he said - but this does not seem to have deterred the regulator.

Advisers will have to file a "horrendous capital gains tax loss report" every time a rebate is made - and clients will have "no chance" of understanding them, he said.

He also issued a challenge to leading fund supermarkets on disclosing adviser charging. After praising FundsNetwork, who revealed their fund manger rebates in August this year, he said he was "really looking forward to Hargreaves Lansdown and Skandia doing the same."