Commenting on the publication of the final platform paper, Payments to platform service providers and cash rebates from providers to consumers, from the Financial Conduct Authority, David Thompson, managing director of Elevate, AXA Wealth, said:
"On our initial review of the paper we can clearly see the direction of travel. If the HMRC announcement sounded the death knell for rebates then this paper will help lay them to rest. Although there is no outright ban on unit rebates we expect demand to continue to fall and the shift towards clean share classes to accelerate.
"The RDR was designed to make things easy. We should now deliver on this objective and create a fully transparent model that will provide clarity for advisers and their clients. Clean share classes have been embraced by advisers on our platform. We believe this is the future for charging structures and will continue to add to our clean share class options during 2013."
Rebates
"Some commentators have suggested that an end to all rebates may impact the competitiveness of platform offerings. We are not sure this is the case. We think it will mean that competitive forces work better across the market, and funds will need to compete with each other and price competitiveness in the round will form a key part of this.
"We believe rebates are complex and confusing, and just mean that clients with significant rebates end up paying significant tax.
"For our Elevate proposition most business is already written on our unbundled charging structure so the impact of losing the ability to retain rebates is minimal. There are now over 1,600 clean share classes available for advisers on our platform with plans to add another thousand over the summer.
"The level of interest we have already witnessed in clean share classes suggests that advisers are increasingly embracing this option for their clients. We are seeing a growing trend for both new money to go into clean share classes and for existing holdings to be switched from the rebate paying share classes. Over 40% of flows on the Elevate platform went into clean share class funds during March 2013. We expect the popularity of clean share classes to continue to increase.
"However, we recognise that during a period of transition advisory firms will require a platform that offers a comprehensive choice of both retail and clean funds. We will continue to do so."
Sunset clause
"If unit and cash rebates are to be removed then this should also apply to all legacy arrangements. We welcome the sunset clause and we believe this helps provide clarity to clients on exactly what they are paying for and starts to level the playing field.
"The RDR was designed to make things easy. We should now deliver on this objective and create a fully transparent model that will provide clarity for advisers and their clients.
"In my view the impact on platforms in absolute terms is minimal as we will seek to provide access to the most cost effective share classes available as we do today, but without the added complexity of rebates. These clean share classes will dominate future advice points and will provide the cleanness and transparency that the customer and the regulator require."
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