Skandia ‘disappointed’ by UK FSA plan to ban legacy rebates
Investment platform Skandia has criticised plans by the UK Financial Services Authority’s (FSA’s) to outlaw rebates on ‘legacy’ business paid by fund groups to platforms from 2016.
The planned move, revealed by Investment Week on Tuesday, would force providers to charge managers for additional services in an attempt to shore up revenue.
Skandia, which in the UK is part of the Old Mutual group, has been vocal in its support for unit rebates as an alternative to cash rebates, could have income from its large legacy back-book compromised by the proposed legislation.
“It would be a disappointing result for advisers and their clients and could result in unnecessary disruption and upheaval on legacy business,” said UK managing director Peter Mann (pictured).
“Our preference would be that no such ban is imposed, but we recognise that the FSA would like to see an end to bundled platform models at some point.”
Allowing a two-year grace period from the implementation of the platform paper in 2014 was “a pragmatic approach”, he added – and something Skandia suggested in correspondence with the regulator.
“Our priority will be to ensure a smooth transition for advisers and their clients resulting in minimal disruption,” Mann said.
Skandia has made plans to leverage its back-book of legacy life and pensions money by switching clients into its new restricted Select fund range. The proposed legacy rebate ban is not believed to affect this arrangement.
This article was first published on Investment Week