Regulator says cash rebate ban will not harm re-registration plans

The Financial Services Authority (FSA) has refused to set timescales for re-registration of assets between platforms while arguing its proposed on cash rebates will not frustrate transfers.

The FSA said the rebate ban would not lead to a proliferation of fund share classes, which would complicate platform to platform re-registration, because fund managers could allow unit reinvestment.

'We do not agree that our proposed ban on cash rebates will necessarily lead to a proliferation of share classes. By allowing unit reinvestment, we do not see the need for fund managers to offer different platforms different share classes. If a platform wants to offer their client a better deal, they can do so through additional unit allocation. If a fund manager wants to offer better terms to a platform, this has nothing to do with the proposed ban on cash rebates,’ stated the FSA in its a policy paper on platforms.

The FSA has decided not to set deadlines for transfer between platforms but will take further action if it finds evidence that fund managers or platforms cause unnecessary delays. ‘If our post-implementation review work suggests that fund managers or other parties are causing unnecessary delays, or that timeliness is being achieved at the price of accuracy, we will consider further rules at that stage,’ stated the FSA.

The FSA also expects to carry out more work on the issue of bulk client transfers. ‘One platform to another within similar timescales to those for single client transfers. We expect firms to make appropriate arrangements to enable bulk transfers to be completed within a reasonable period of time, although we accept that timescales might need to be a little longer than those for single client transfers,’ stated the FSA.

The FSA confirmed that its re-registration apply to all nominee firms which hold investments from retail clients but stated it did not plan to extend its rules to insurance bonds

The FSA mandated that all wrap and platforms would need to provide in specie re-registration from 2012 in May 2010 following a New Model Adviser® campaign backed by over 700 advisers. The Tax Incentivised Savings Association (Tisa) has spearheaded the development of a re-registration solution but warned in February that plans to ban cash rebates threaten to derail the project.

Tisa had drafted an 11-day standard for the transfer of fund units in-specie between platforms with Ascentric and Fidelity FundsNetwork completing the first exchange in June.