Monday 27 February 2012
IMA: FSA LEGACY GUIDANCE COULD LEAD TO DISTORTIONS IN THE MARKETPLACE
The FSA has today issued guidance on how product providers, platforms and advisers should decide whether payments into products after 1 January 2013 are ‘legacy’ business (so trail commission can continue to be paid) or are subject to the post-RDR rules.
Commenting on the guidance, Julie Patterson, Director of Authorised Funds and Tax at the IMA, said:
“We welcome the clarity provided by the new guidance for some common scenarios. These include top-ups to existing investment when new advice is given, and automatic changes to investments due to a portfolio rebalancing or investment increases agreed before the end of 2012.
“We are very disappointed, though, that the new guidance expressly allows investments underlying a life product to change and not be subject to the new RDR rules, even where new advice has been given. This will lead to distortions in the marketplace, about which we have consistently raised concerns.
“it is also disappointing that the FSA has decided not to include in the guidance explicit recognition that product providers and platforms can only act on the basis of instructions from advisers.
“We note that the FSA has decided not to introduce at this stage a sunset provision, whereby all trail commission would cease, after, say, 5 years. However, we welcome the commitment to monitor developments in the marketplace to act if trail commission levels do not reduce.”
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For further information, please contact:
Clare Murphy-McGreevey, Media Relations Manager, IMA, 020 7831 0898 or 07843 517618
Mona Patel, Head of Communications, IMA, 020 7831 0898 or 07834 089332
About the Investment Management Association
The IMA is the trade body for the UK's £4 trillion asset management industry. The money its members manage is in a wide variety of investment vehicles including authorised investment funds, pension funds and stocks and shares ISAs. Our purpose is to support and promote a commercially successful and growing UK investment management industry as we seek to improve the financial outcomes for customers - savers and investors.