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Gracious, how vexing.

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A short but highly peeved post today as a result of the FSA mucking about still further on platform rebates. You can read a summary of the story on Citywire, with a fetching picture of Hugo.

I’ve written before on the lunacy of the cash rebate ban on platforms. On the patented Lang Cat Scale of Mentalness, which ranges from ‘1’ to ‘mental’, this is firmly at the ‘mental’ end. Furthermore, it betrays a lack of belief in IFAs’ ability to move away from the sins of the past towards a fairer, more transparent new model that is profoundly depressing.

For those not acquainted, the argument goes that IFAs will simply set their charging at the level of the rebate to disguise it rather than doing it properly. Across the various IFA businesses the lang cat has worked with in various berths – and that’s probably close to 200 firms – this practice has never, ever been mentioned. I’m all for risk mitigation, and there are trolls out there, but this is too much.

One hears a rumour that FSA are considering a retrenching from the ban – that’s good – but then are thinking about mandating an approach where rebates must be split between units and cash. I don’t speak for anyone except myself, but I suspect we can all get on board with seeing this for the arrant nonsense it is.

Here’s a suggestion. Providers – generally – don’t want to muck about with different share classes and all the attendant re-reg problems. They also want to be able to compete on getting good rebates for their customers. So there’s some skin in this for them. In return for allowing cash rebates to continue, providers could stick their hand up to monitor the level of adviser charging and watch for where it matches very closely the amount of rebate taken. FSA could do random sampling to check. If there’s no problem then there’s no problem. If there is one then FSA can say ‘ha, told you so’ and we can buy them a box of chocolates to say sorry.

Even that’s a step too far – but it might get us where we need to be. Meanwhile, the dates go back and the RDR deadline gets ever closer.

As a good friend of mine says when she’s not allowed to swear: “Gracious, how vexing.”

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About Mark Polson

lang cat founder and boss. Expert on all things platforms, pensions and investments. Prolific writer and public speaker, even when people ask him not to be. Knows more about Scandinavian black metal than you, and isn't afraid to prove it.