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Press Release

Monday 1 October 2012


In its response to the FSA’s consultation paper “Payments to platform service providers and cash rebates from providers to customers” the Investment Management Association (IMA) has asked for clarity about what can be paid to platforms and expresses concern about the FSA's proposed approach to cash rebates for investors.

IMA is fully in favour of transparency and effective disclosure to consumers and agrees that it is right for platform charges to be disclosed to and agreed by clients.  The lack of clarity about what can be paid to platforms, and for what services, is unsettling when platforms and fund management firms are in the process of agreeing new business arrangements in order to implement RDR.  

The FSA’s proposal to ban cash rebates to investors but to allow 'unit rebates' (which will involve a series of unit purchases and redemptions) is illogical, is unlikely to meet the consumer’s need for clarity and understanding, and will inevitably lead to confusion.  The cash rebate ban is also at odds with the recent European Parliamentary agreement on the MiFID review that rebates to consumers are allowed.

Julie Patterson, IMA Director of Authorised Funds and Tax, said:

“It is not acceptable to have uncertainty about what can be paid to platforms and for what services.  Fund managers and platform providers need to have absolute clarity to allow them to set up appropriate business models to accommodate the new rules.  Systems cannot be set up overnight.  

“Also, it is inexplicable that after more than six years of debate, the FSA is now proposing a messy and opaque system of unit purchases and redemptions. This smacks of the system of 'factoring' in the insurance industry, which the FSA has long said is unacceptable.

“Moreover, this proposal does not fit with the recent agreement by the European Parliamentary Committee on the MiFID review*.  It is not clear that the UK will be able to prevent foreign fund managers from passing cash rebates to UK investors.  This proposal could therefore be damaging to the UK’s competitiveness.”


*The Review of the Markets in Financial Instruments Directive (MiFID) is currently being considered by the European Parliamentary Committee.  A recent vote on one particular aspect of the Directive by that Committee proposed that inducements would be permitted to be paid by product manufacturers provided the payment was made in a transparent way and the investor was made aware of the costs of advice and what the payment is for.

This could give rise to conflict with the UK's Retail Distribution Review (RDR) under which inducements (rebates) are banned. On the face of it, fund managers in Europe would be permitted to pay inducements to UK investors whereas UK fund managers could not.   

The full IMA response is available here.

For further information please contact:

Mona Patel, Head of Communications
020 7831 0898 or 07834 089332

Navdeep Sidhu, Press Officer
020 7831 0898 or 07843 517 618

Christina Bridge, Press Assistant
020 7831 0898

About the Investment Management Association

  • The IMA is the trade body for the UK's £4.2 trillion asset management industry (retail and institutional) which is one of the world's leading investment management centres.
  • Our role is to represent the interests of the asset management industry to government and regulators both in the UK and internationally.
  • The money our members manage is in a wide variety of investment vehicles including authorised investment funds, pension funds and stocks and shares ISAs.

Investment management association