Platform Charges

It has been a long time coming – e.g. see Regulatory Roundup 33 from August 2011 – but the final policy statement on platforms and charging has now been published (PS13/1 “Payments to platform service providers and cash rebates from providers to consumers”).

At its core, platforms will not be allowed to be funded by rebates/payments from product providers, but instead will be paid for by a ‘platform charge’ which is disclosed to and agreed by the investors. The rules will restrict the influence that product providers and platforms have on the promotion of one fund over another and will be in line with the Retail Distribution Review (RDR) objectives. However note that the cash rebate ban will also impact on the non-advised market (although the FCA will allow both advised and non-advised investors to receive cash rebates of up to as much as £1 per month; it will allow a platform to receive a rebate in cash, but only if this is passed on to the investor in the form of additional units).

The rules and guidance can be found in Appendix C of PS13/1.

The new rules will come into force on 6 April 2014. Note that the effect of the transitional provisions in TP 2 mean that platforms will have two years (i.e. until 6 April 2016) to move existing customers to the new charging model. After this time, both new and existing business will be subject to a platform charge.

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