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The worst of all worlds

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You couldn’t make it up.

I’m yet to meet anyone who thinks unit rebates are a good idea. That’s not quite true. I know one provider who likes them, mainly because they have the functionality in place to deal with them and they reckon there’s a competitive advantage there (that may not be how they’d put it). But everyone else, not so much.

I’m repeating myself, but the proposed cash rebate ban is completely daft. In fact, I think many in the FSA / FCA now think it’s daft too, but the ship has sailed and I suspect the highheidyins in Canary Wharf will not be for backsliding. But at least if all rebates have to be paid in units, no matter how nonsensical, we know where we are.

TISA members have been pushing for a ‘de minimis’ (why do we use Latin? Hmmm? It used to apply to a certain bit of pensions legislation, but now?) limit below which rebates could be paid as cash, and have suggested £10 as a useful figure. I can sort of see that – most rebates are well under that anyway and in effect this would soften the ban dramatically.

But that’s not what we’re getting, according to Citywire today. No, the cut-off figure will be £1.

£1.

So a rebate of 99 pennies can be paid in cash, but one of 101 pennies is SO DANGEROUS that we have to buy units or bits of units to deal with it.

Nice job on increasing transparency, FSA. Nice job on increasing administrative complexity, increasing costs and requiring the industry to develop basically worthless kit to deal with a non-existent threat of advisers mucking around with their charges to fit them inside the rebate. Nice job on making the whole thing harder to explain to clients. The only potential saving grace is that if rebates do get taxed to Falkirk and back they’ll probably die out anyway, but that’s hardly the point.

I’ve got an idea. Everyone involved in coming up with this proposal should be forced to sit in front of clients and explain it for 50% of the rest of their natural lives. Another 49% should be spent calculating the trades for partial units for rebates over 100 pennies. 1% is available for sustenance and personal hygiene tasks. I’m nothing if not fair.

I really don’t know how we got here, but at a time when so much is changing for the better, this just seems to me the worst of all possible worlds.

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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.