The impact of charges over time can have a devastating effect on the client outcome. The combination of inflation and the total cost of (ongoing) ownership can eat into a large part of the expected return, so it’s vital that the costs are reduced wherever possible.
How does the platform you use allow you to reduce those total costs to achieve the right outcome? The right decision regarding wrapper selection, taxation, investment and portfolio management can make the difference between success and failure.
Conducting platform due diligence in a structured and robust format, which will meet the requirements of the FCA, is no small task. The good news is that there are a number of external companies that can help advisers in this area, with varying solutions ranging from online tools to standard reports, through to full consultancy services.
Platform suitability is ultimately about ensuring the best outcomes for clients and platform providers must do their bit too.
Mike Barrett is platform marketing manager at Skandia
FCA: Platform payment rules
In its policy statement, payments to platform service providers and cash rebates from providers to consumers, the FCA listed a number of changes to be made to the Conduct of Business Sourcebook (Cobs), which came into force this month. These included:
Adviser charging and remuneration
A firm must not make a personal recommendation to a retail client in relation to a retail investment product if it knows, or ought to know, that:
• The product’s charges or the platform service provider’s charges are presented in a way that offsets or may appear to offset any adviser charges or platform charges that are payable by that retail client; or
• The product’s charges or other payments are maintained by the retail investment product provider at a level such that a cash rebate, other than a cash rebate permitted by Cobs, is payable to the retail client.
Requirement to be paid through platform charges
Except as specified in Cobs, a platform service provider must:
• Only be remunerated for its platform service (and any other related services it provides), by platform charges; and
• Ensure that none of its associates accepts any remuneration in respect of those services.
Examples of remuneration that should not be accepted by a platform service provider or its associates include (but are not limited to):
• A share of an annual management charge; and
• Any payment (other than a product charge or a platform charge) made to a platform service provider in its capacity as a retail investment product provider where the relevant retail investment product is distributed to retail clients by its platform service.
