Although the new platform rules given to us by PS13/1 (Payments to platform service providers and cash rebates from providers to consumers, to give it its full name) only came into force on 6 April, they have been a part of the financial services landscape for a year (or near enough for a blog title not to trigger correction emails).Â Â
Now, most of us are familiar with the science of annual reviews.Â The delicate balance of kicks and cuddles designed to make you feel just praised enough so that the ‘could do better’ development suggestions don’t make you die too much inside.
So what if the PS13/1 in the chair?Â Has it achieved it objectives with the implementation of the new platform rules?
Clearly this isn’t a full review (that would take more than a blog and the FCA has it in hand) just a round-up of a few of the points we’ve talked about over the last 12 months. Not least in our white paper. We even carried out a brief survey on the topic so that gets a mention too.Â Â
RIP RebatesÂ – whether you agree with it or not, you cannot deny the activity around clean share classes and their many derivatives.Â Whether they are cheaper in the long run is another issue but at least the price tickets are all turned over so we can see what’s what, who’s getting it and what for.
Presentation of investments without biasÂ – the onus of ensuring that platforms were playing by the new rules fell to advisers.Â A potential consequence of which was brought to our attention earlier this year when Tim Page of Page Russell shared his experience. Â
The detail is covered in the duck test but, essentially, the new rules appear to prevent advisers from recommending D2C platform investments.Â The D2C business model is perceived to direct clients into proprietary funds which breaches COBS 6.1F.1 (and COBS 6.1E.9).
Platform remuneration from retail product providersÂ – our survey results highlighted the scope for interpretation of the rules.Â Of two platforms who both offered basic advertising packages, one responded that they did receive remuneration and one that they did not.Â
The platform viewÂ – Based on our survey results the vast majority of provider respondents were quite comfortable with their position in light of PS13/1.Â While this was as at Q4 2013, it is consistent with the outcome of the FCA’s pre implementation review in February.Â Â
And advisers?Â – The sample was small so we are cautious of using words like ‘trend’ but with that caveat in mind, we saw no real sense of advisers being directed to certain investments, of some funds being easier to access or adverts being overly eye catching.Â This is encouraging.Â Â
Kicks + cuddles = could do better?
The D2C issue isn’t about potential client detriment, just who carries out the research. ÃÂ Here at the lang cat we believe that advised and D2C propositions can work together for the client’s benefit.Â One of PS13/1’s core objectives is to protect the client’s interests but it appears to prevent recommending what may be the most appropriate product.Â Bit of an own goal if you ask us but a good opportunity for the FCA to throw some clarity into the mix.
At its heart PS13/1 (and the rules it has become) is about treating customers fairly and acting in their best interests.Â In the majority of points it has done what it set out to do but there is complexity and ambiguity and, yes, there are development points.Â Â
So, based on this very limited view, more cuddles than kicks but a few things to work on for next year.Â Â