FSA refuses to back down on cash rebate ban

These rules are going to have to be terribly complicated. How can we re-invest rebates in units/shares successfully when we are buying and selling holdings pre-rebate? It appears to be a daft and uneccessary ruling which safeguards no one but inconveniences Platforms and their users. When Platforms employing cash rebates are the most transparent, checkable means of dealing with client charges, having unecessary regulatory interference with a fine clean system does annoy and its irony coming as it does from the consumer's champion does not soften the infuriating daftness of it. The Regulator could have chosen to listen more attentively to the 'new' lobby with its cleaner client focused way of dealing instead of to the 'old' who have comfortably dealt with other people's money as if it were their own, behind their closed doors for too long

Cue wailing and gnashing of teeth from the Cash Rebate Offsetters....

This is puzzling. What are we accused of offsetting?

The good old FSA, fantastic again!!! How can one organisation get it so wrong all of the time!

So if you encash units in a platform to pay for adviser charges, this is just commission by another name...so we will stop that... what we want is the client to actually give you some cash every month, maybe we could go back to knocking on customers doors to collect money!!!!!!!!

If this really is the FSA's final decision it would only have a (minute) bit of sense if the FSA also banned cash accounts on wraps and platforms, which can be used for paying charges.

If this happened, the real transparency of good quality wraps, for example, would disappear.

The DETRIMENT to clients/customers/consumers would be very serious. It can only be regarded as a retrograde step.

BANNING CASH REBATES ONLY CREATES UNNECESSARY EXTRA COST FOR CONSUMERS.

IT DOES NOT HAVE ANY BENEFICIAL EFFECT WHEN INTERMEDIARY FEES HAVE TO BE AGREED BY THE CLIENT.

"Rebates allowed liquidity for IFA fee payment" they also allow liquidity for paying associated policy plan charges, administration charges.

The whole point of rebates in the first place was to allow "retail clients" access to retail funds with a discount to pay for associated services that may help them effectively manage their investments/portfolio and still benefit from large scale pricing whilst maintaining retal status as far as the FSCS was concerned.

If we force the fund groups down the line of "Institutional Only share class" do we then end up watering down consumer protection? This was not the plan of RDR.

As an Adviser I need to allow for liquidity to pay my costs & fees so why deprive clients of this ability.

FSA are causing a massive admin burden that the consumer does not want or need.

P.S.

Do we now have to expect the future ban on dividends and interest being paid in cash to the client's platform cash account ??

Did anyone see the programme on BBC2 on Sunday evening about the Paris institution, the Wildensteins, who adjudicate on whether Monet paintings are fake or genuine; without their approval, any claim about the validity of a painting is worthless. They stared down the facts on a particular painting and their decision is final, there is no right of appeal; they are accountable to no one.

Sound familiar?

What ever happened to 'choice'? Whatever anyone's individual preferences why force the consumer and adviser down one path? The benefit to the consumer here is minimal, if not entirely dubious in the first place, yet they will once again end up paying for it. Why to the FSA get so hung up on, what is for the population at large, this level of minutiae yet matters like single (and regular) premium PPI go on under their noses for at least a decade (why could they not smell such a crock of poop)? That is what really affects the consumer yet they did nothing for so long.

This is just a group of people who do not know anything about platforms and have no real care for the people they are supposed to be 'protecting'.

The argument about the rebates being used to pay adviser fees has no reality attached and takes no account of the fees the clients have to pay to the platforms. So now, each client will have to hold larger cash accounts to pay for the fees of the platform, IFA and for those who use a 3rd party to run their funds. How can this beneficial for the client?

Additionally, there will be additional costs for the platforms and the fund managers, adding small amounts of units each month etc. Where is the sense in all of this?

So the power play in the end was the ABI throwing their weight around. I suppose from most insurers point of views the mirrored funds they offer have no rebates therefore they want the platforms in the same position to allow for direct comparisons.

I think this will become a non-issue in time as the fund managers will introduce a single 'platform' share class for most platforms and probably a separate 'retail' share class for direct distribution and for EO houses when bundling will survive.

Interesting to see house the EO brigade will fair when the funds they offer are more expensive than the equivalent on a platform. No doubt the charges will be hidden some how. HL et al will be very keen to keep the bundling they enjoy at the moment as the cost of their service is not something they want their customer asking about. Shame the FSA doesn't introduce a level playing field between advised and EO intermediaries. Imagine an HL customer asking what the 750bps are for?

Great news for you skandia etc boys.....go new model go!

I predict a volte-face by the FSA just after massive spends by all affected to deal with the ban. You read it here first.

The ABI say they have not been lobbying for a ban on cash rebates, I have not seen any lobbying but plenty by the IMA and others pointing out allegeded advantages the ban hands life companies.

On these blogs we have seen that these advantages are scare mongering by the IMA and pure illusion. Don't forget a lot of life companies own wraps so I leave it up to you to decide who has been making up stories that suits their members.

The IMA knows the answer all along there should not be a rebate at all and what is needed is variable share classes they decided to resist that. For once the FSA is right because what is not obvious is what is being skimmed off these cash rebates by some platforms. It is claimed the charging is transparent, if nobody knows what's being skimmed off the so called haircut on the rebate how can we tell, though I suspect the FSA will have demanded information and knows exactly what's been going on behind the scenes.

the legacy assets issue should be fun for the insurers - not allowing adviser charging is hardly TCF - interesting times......banning cash rebates well I can hardly say I'm surprised.....

'MONEY DOESN'T TALK, IT SWEARS... ' as someone once said :-)

What one could call an almighty cock up from the FSA AGAIN!

Instead of protecting clients interests, choices and affordability and availability of economically priced independent financial advice, the regulator has effectively put a spoke in the wheel of the iFA sector so that no matter how hard we pedal, the wheels of commerce are not going to move.

Only the very wealthy will pay upfront fees and ongoing servicing fees from cash / income, the message here is clear, the consumer can go to hell in a handcart, WE (the FSA ) know best, notwithstanding that none of those who regulate us have the faintest idea as to what the consumer wants.

RDR = Really Damaging Regulation