Adviser > News > January 2011 > Delivering the RDR and other issues for platforms and nominee-related services
Delivering the RDR and other issues for platforms and nominee-related services
The following is a summary of the FSA's RDR paper Consultation Paper 10/29 published in November 2010 which covers how platforms should be regulated from January 2013.
Main points of CP10/29
Payments to platforms by fund managers/product providers
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The FSA concluded that because platforms provide administration services to fund managers (rather than distribution services) they are entitled to payment from the fund managers for those services. This means payments may continue post RDR, subject to improved disclosure to clients.
- Platforms must also ensure there is impartiality in the presentation of funds/products on their platform.
Rebates to customers
Respond to the consultation
To send your comments on CP10/29, complete the FSA's online response form.
Responses must be sent to the FSA by 17 February 2011. The FSA expect to issue a follow up Policy Statement in 2011.
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The consultation paper proposes to ban the payment of cash rebates as these could appear to offset the adviser charge, effectively replacing commission, and it may appear that the fund manager/product provider is paying for the advice.
- The alternative suggestion is to continue to allow rebates to be paid to customers but in the form of addition units/shares instead of cash, which will cause issues for fund/product providers and for the platforms and customers.
Independence and the use of platforms
The FSA's overall aim is to ensure that firms consider all of the appropriate options and ensure that the recommendations they make are suitable and in their clients' best interests. To do this the adviser firm must consider the appropriateness of the overall solution, which includes the platform, the tax wrapper/product, the funds and their advice services.
So although the FSA has confirmed that advisers can still remain independent and use one platform, they must be able to prove that it is appropriate for their whole client base or else deal with some clients "off platform".
Re-registration
The FSA proposes to make re-registration between nominee companies including all platforms compulsory from 1 January 2013.
The process of re-registration, or transferring in specie, avoids the need to convert unit/share holdings back into cash, by selling them, prior to transferring to another nominee, platform or tax wrapper and purchasing new unit/shares.
Investing in funds through authorised nominees
The FSA believes that the individual unit holders accessing funds through a platform (via a nominee account) should receive the important information in a timely manner as if they were investing directly. The FSA proposes that the nominees (platforms) should facilitate passing on the information and voting rights to the individual customers.
Capital Adequacy
The FSA has proposed they will continue to assess the capital adequacy of platforms as they outlined in Discussion Paper 10/2 published in March 2010. Some firms suggested this could encourage platform providers to set up outside of the European Economic Area and passport into the UK under Markets in Financial Instruments Directive MiFID.
Source:
- This is consistent with the Securities Law Directive.
- FSA has given the term "intermediate unit holder" to cover all types of nominee.
For professional advisers only
