The FSA has warned that revenue-sharing arrangements, where advice firms hold shares in a platform and benefit financially by investing client assets on that platform, will not be allowed to continue after RDR has been implemented.
Revenue-sharing arrangements, where advice firms hold shares in a platform and benefit financially by investing client assets on that platform, will not be allowed to continue after RDR has been implemented.
This warning came from the FSA last week at the Capita Financial Software conference. Rory Percival, the FSA conduct and risk division supervisor, said the regulator had witnessed revenue-sharing arrangements by firms recently that would breach the RDR.
Percival went on to say that: “The rules we have set out clearly prevent an advisory firm white-labelling a platform and sharing the revenues generated through advised business being placed on the platform. I make this point very clearly as we see firms introducing revenue-sharing arrangements now that apparently will be in breach of the adviser-charging rules in 2013. We ask whether firms are really introducing an arrangement that has a shelf-life of 15 months or if they have misunderstood the adviser-charging rules.”
He went on to add that there are no rules against adviser firms holding shares in platforms but highlighted that conflict of interest issues must be managed in these cases.
There has been a mixed response from the industry, with some taking the view that there needs to be greater details issued from the FSA around the rules of this ban, whilst others have felt that the FSA has been very clear with just a few grey areas to work out.