Platform rebate ban is good news for consumers says Panel
The Financial Services Consumer Panel has welcomed the FSA's decision in principle to ban rebates to platforms. This follows the Panel's call for a rebate ban in March 2011. However, the Panel has expressed concern that the FSA is yet to announce a date when this ban will begin. The Panel has always been supportive of the FSA's Retail Distribution Review (RDR), which bans commission payments, and for consistency would have liked to see the ban on rebates brought in at the same time as the RDR is implemented.
Platforms, as on-line resources for buying, selling and administering investment portfolios are becoming increasingly important to consumers and financial advisers alike with the potential market for assets under management estimated at Â£2 trillion.
Adam Phillips, Chair of the Consumer Panel, commented:
"We are very pleased to see that the FSA has listened to the Panel's call for a rebate ban, but disappointed that no firm date for implementation has been set. A ban will ensure that the principles of the Retail Distribution Review are not compromised by platforms.
We want to see a platforms market where choice, access and value for money for consumers are essential components. Rebates can create bias in favour of more costly products and a potential mechanism for advisers to receive commission. Banning them is the right move.
Given the delay in implementing the ban, it is vital that the FSA steps up its supervision activity to ensure that consumers are protected during the transition period. Any further business model analysis must be conducted quickly so that the ban can be put in place as soon as possible."
Notes to editors
- The Financial Services Consumer Panel response to the FSA's original Platforms consultation can be found on our website.
- The Panel's research on Platforms can also be found on our website.
- The Consumer Panel is a statutory body under the Financial Services and Markets Act 2000 and was initially established by the Financial Services Authority in December 1998. The Panel advises the FSA Board on the interests and concerns of consumers and reports on the FSA's performance in meeting its objectives.
- The emphasis of the Panel's work is on activities that are regulated by the FSA, although it may also look at the impact on consumers of activities outside but related to the FSA's remit. More information about the Panel's work is available on our website.
- From the 1st April 2011 there are fifteen members of the Panel as listed below. Panel members are appointed to serve a maximum of two terms of three years. Further information on individual members.