Six ways your platform will change under RDR

Nucleus technical communications manager Terry Huddart explains how the platform industry is preparing for the new regulatory landscape

Our industry is experiencing a time of great change as the RDR gets steadily closer. And as we approach it, it is very easy for advisers and providers alike to get a bit bogged down by the weight of the new regulations, not to mention the administration.

However, I think there are six weightier aspects of the FSA’s measures that platforms, fund supermarkets and execution-only brokers need to be looking at. Some of these still need further clarification, but the FSA’s proposals are being set out to introduce greater trust, engagement and value across the industry and to consumers.

There are shaping up to be two ‘phases’ of delivery; 31 December 2012 for most of the RDR and later in 2013, specifically for the changes relating to rebates, and I have no doubt there will be further discussion and consultation as the dates and specifics relating to rebates are clarified. The main point here, and an exceptionally good thing, is that transparent fund manager fees will increase consumer trust and confidence in financial services.

First phase – December 2012

1. Platforms are required to disclose any fees or commission accepted from a third party. This means fund supermarkets will have to disclose payments, similar to Cofunds and Fidelity who have made recent announcements. As Skandia continues to prevaricate and protest the most, we expect its disclosure – when it occurs – to be most revealing. Execution-only brokers such as Hargreaves Lansdown are also included in this and again are pretty vocal in putting forward the ‘Tesco beans’ argument.

2. The regulator has also issued a series of key rules around the implementation of compulsory re-registration of assets onto and off platforms, which the Tisa initiative is pushing to improve the industry approach. Platforms who do not provide ‘on’ and ‘off’ re-registration will have to develop this capability.

3. Single platform use – advisers should take into account whether a platform is in each client’s best interests. IFAs may well need support through the provision of information to assist in appropriate platform selection and due diligence justifications. There will undeniably be more focus on due diligence and we are already seeing this. The FSA is pretty explicit that IFAs will face challenges in complying with this if they are using only a platform that accepts FM rebates.

4. The FSA has said that, if they wish to hold themselves out as independent, advisers will need to ensure that they do not use products that are presented in a biased manner. This is going to have an impact on planning tools and what assets and products they recommend. Platforms will therefore need to look seriously at their advice tools and outputs in order to support advisers in the post RDR landscape.