Blog: FSA must clarify platform regs or undermine RDR

When the FSA's eagerly anticipated and much delayed platform policy paper finally dropped into our inboxes it provided yet another twist to the ongoing rebate debate.

But ultimately the paper was disappointing and proved something of an anti-climax.

When the industry was crying out for clarification and a roadmap of rules leading to January 1, 2013 what it got instead was yet more confusion and delay.

And the FSA's thinking on platform remuneration seems hazy and confused at best.

The headline from the policy statement was the news the regulator ultimately wants to ban both fund manager and cash rebates but needs more time to research the issue before doing so.

Crucially, final platform charging rules will now not come into effect until after January 1, 2013 - a decision which means RDR and platform rules will now be out of kilter and misaligned.

Given the fact platforms have long been touted as a central tenet of RDR, with the recent emergence of RDR-friendly wraps leading the charge into the new adviser world, the misalignment seems confusing and potentially dangerous. 

Yesterday's paper is a disappointment because everyone had been hoping it would finally put an end to the ongoing rebate debate. But now the debate lingers on.

The thorny issue of rebates has long been one of the most controversial aspects of the FSA's RDR rules. Its meanderings and U-turns on both fund manager and cash rebates has created headline aplenty for us journos but headache aplenty for industry players.

The dithering and dabbling suggests the regulator hasn't quite got its head around the issue.

Since first mooted in March 2010, the cash rebate ban has been shrouded in controversy. The FSA decided to proceed with the proposal in CP10/29 - a move which triggered a large backlash from a platform community opposed to the move's complexity and potential for consumer detriment.

A concerted lobbying effort was subsequently undertaken by major platform players, with the exception of Skandia, in a bid to force a rethink. 

Yesterday, the industry was expecting a final decision on cash rebates but the FSA again planted a shocker by delaying the ban. 

Even more perplexing is the regulator's thinking around fund manager rebates. It first proposed a ban on payments from fund managers to platforms in its March 2010 discussion paper, citing the potential for product bias.

This appeared to sound the death knell for bundled charging structures, causing huge disquiet from the fund supermarket camp which promptly launched an impressive lobbying campaign in an effort to overturn the proposed ban.

That lobbying proved to be effective, with the FSA appearing to do something of a u-turn in CP 10/29 when it said fund manager rebates could continue provided they are fully disclosed.

Yet we now appear to have come full circle, with the FSA again outlining its plan to ban fund manager rebates. Confusing? Not half.

It seems the industry has been taken on a long and meandering journey only to end up where we were back in March 2010.

The FSA now urgently needs to provide the long-suffering platform and adviser community with the clarity they have been crying out for.