Wrap platforms should have choice of product wrappers says Ascentric
Friday, 11 April 2008
In response to the FSA Feedback Statement 08/1 Ascentric welcomed the clarification from the FSA that it viewed Life and Pension Wrappers as not 'benign', thus implying IFAs will find it difficult to justify exclusive use of any platform that does not offer a choice of product wrappers.
Whilst the choice of product wrappers will remain an emotive issue with many Platform Providers, the FSA's feedback statement to its discussion paper DP07/02 "Platforms: the role of wraps and fund supermarkets" is viewed by Ascentric as providing a very sensible and incisive response to the issues that have been covered by both the original discussion paper and the subsequent feedback.
Hugo Thorman, Executive Managing Director Ascentric and Fundsdirect, said "We are extremely happy with the outcome from all the industry discussions surrounding the FSA paper, and concur with the findings of the FSA."
In particular Hugo Thorman made reference to the following:
- We welcome the Principles-Based regulation approach to platforms, proposed by the FSA, as the diverse nature of issues arising from platforms would be difficult to cover adequately by a set of prescriptive rules and regulations.
- More importantly the principles based approach also ensures that the key issues of ensuring customer suitability of products and services, clear and transparent charging, IFA remuneration and adviser independence are primarily addressed.
- The FSA's three primary concerns in respect of Platforms, cost to customers, potential for conflicts of interest and need for competent advisers, are all fully recognised and shared.
- The FSA has quite rightly identified that platform use goes hand in hand with the transition of intermediaries from a transaction based business model to a fee based remuneration model. Thereby, offering clients ongoing services that deliver a better outcome in terms of providing for customer needs and treating them fairly.
- Ascentric very much welcomes the support that the FSA has given in both papers, regarding the market moving towards fee based adviser remuneration with clear and transparent charging. In common with the FSA, we see no place in the new world for old style bundled and obscure pricing of advice, products and services.
- Of particular note is that the FSA has been clear in their response that, "at present, life and pensions products are not "benign"wrappers" as they generally involve varying charges and product features that mean some life or pension products are suitable for some customers and others are not". We consider this to be an important issue for platforms as many do not permit a choice of life and pension products necessary to enable adviser selection based on client suitability.
- We therefore support the FSA's view that advisers "should give careful consideration to reassessing which platform to use on an ongoing basis in order to ensure the choice remains appropriate for their customers and the services they provide". We believe that this is a key issue and are pleased that the FSA agree that a choice of a platform by an adviser firm should not limit their responsibility to recommend appropriate product wrappers that meet the individual suitability test for each of their clients.
As a platform created by IFAs for IFAs, we have always recognised the potential for conflict of interest and therefore have ensured full disclosure to the customer. We also understand the need to manage this conflict and this clarification from the FSA is welcome.
Notwithstanding the above, we view the greater potential conflicts of interest to be the selection of platforms based on convenience or other factors that benefit the firm or network whilst restricting the choice of suitable products to those offered by the platform provider and the potential conflict inherent with bundled and opaque remuneration for providers and advisers.
The FSA reiterated the point made in the discussion paper that "intermediaries should consider any constraints a platform imposes and whether the platform is therefore appropriate for them and their customers". This seems particularly relevant to both ease of re-registration and choice of product wrapper provider.
Ascentric can offer intermediaries a wrap platform that is aligned with the aims of the FSA. Details of the Ascentric proposition can be found at www.ascentric.co.uk or intermediaries wishing a face to face meeting with Ascentric should call customer services on 0871 423 6000.
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For further information, please contact:
Ascentric
Hugo Thorman, Executive Managing Director
E-mail: hugo.thorman@ascentric.co.uk
Tel: 0207 553 9158
Mobile: 07710 877 998
Notes to Editors:
About Ascentric
Ascentric is Fundsdirect's whole of market wrap service, available exclusively to IFAs, offering a fully integrated online viewing and dealing resource.
Ascentric enables IFAs to transfer their clients' assets onto a single platform providing them with the facilities to manage each client's financial needs in just one place. This is obviously a considerable enhancement to the existing, time-consuming practice of IFAs introducing their clients to a number of different product providers. The Ascentric platform enables IFAs to consolidate their clients' assets and to switch products and funds easily, thus achieving significantly improved investment returns.
Fundsdirect Ltd was founded in 1982, and launched the UK's first online fund supermarket in December 1999. Since that time, they have built a reputation as a leading UK fund supermarket with the aim of offering every investor the opportunity to purchase funds at discounted costs, whilst simplifying the relationship between clients, IFAs and Product Providers, by developing the Ascentric 'wrap'.
For further information about Ascentric and Fundsdirect, please visit www.ascentric.co.uk