“Nothing to do with us guv” – a sideways look at the FCA’s rules for platforms



This is how the FCA is selling us the abolition of rebates on retail platform business.

The Financial Conduct Authority has published rules to make the way that investors pay for platforms more transparent. In the future, platforms, in both the advised and non-advised market, will not be allowed to be funded by payments (commonly described as ‘rebates’) from product providers.  Instead, a platform service must be paid for by a platform charge which is disclosed to and agreed by the investor.

Currently, providers of investment products, such as investment managers, generally pay a rebate to some platforms in order to have their products included on a platform. This rebate comes from the annual management charge (AMC) which is paid by the investor to the fund manager. As a result, some platforms are able to give the impression that they are offering a free service, which means that the investor may not understand the true cost of the service provided by the platform.

This appears to me but half the story. What if you are a bold fund manager looking to build a business around being true and fair in your dealings with your unitholders? Let us say you off a true and fair charge of 1% pa on your fund which is inclusive of all your costs because you carefully manage them. Now let us suppose you go to a platform manager who demands a rebate of 0.75% for the privilege of distributing your fund.

This is the Tesco choice, pay up and risk ruin as you “sell at a loss” or hold out and find yourself a leper, excluded from the platform’s buy-list.

Consumer detriment? Well a top manager may find he has no shop window on a top platform and people will ask questions. What does that manager do? Disclose that he is being held to ransom or keep mum?

If he’s worth his salt he says

to hell with you, I can distribute myself and I’ll wait till some regulator sorts this out

There is a straightforward alternative to this , which has been adopted by Legal and General (the life company rather than its subsidiary Co-funds). quite simply L & G apply a platform charge on all funds  which is added to the factory-gate price of the fund and the price the customer pays is the combination of the two.

Why I prefer this is that I know that the platform has been consistent in its pricing across the board and that where a fund manager has dropped his pants, he’s done it to get the customer a better deal, not to add to the platform manager’s bottom line.

You can read the rest of the FCA’s press release here. No need to bother!


Something that surprises me is the lack of interest in all this from the lah de dah institutional platform managers – the insurers and  a few up-market workplace platforms (Hargreaves Lansdowne straddling the divide).

Along with the warning-off of rebates are some robustly worded statements about the use of advertising to buy your way onto best advice lists. I hope the FCA will have their binoculars trained on the corporate boxes of the asset managers this summer. We wouldn’t want any of our virtuous investment consultancies being mistaken from  their chavvy retail cousins in taking the fund manager’s shilling.

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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2 Responses to “Nothing to do with us guv” – a sideways look at the FCA’s rules for platforms

  1. Russell Welsh says:


  2. Pingback: The true and fair way to “cost” your investments | The Vision of the Pension Plowman

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