FSA Discussion Paper Feedback
The FSA Discussion Paper (DP07/02) Feedback Statement 08/1 has been welcomed by us and we strongly support the principles-based approach they propose. The DP response has also confirmed that the Ascentric platform satisfies the key aspects of their concerns, particularly the issues of ensuring customer suitability of products and services, clear and transparent charging, IFA remuneration and Adviser independence.
The FSA response and the clarifications it contains will now encourage firms to seek a Wrap platform for their business. However, it will also be important for advisers to make an informed decision when making this critical selection.
‘Whole-of-Market’ coverage – A fundamental feature of the Ascentric platform is that it offers a whole-of-market approach, thereby allowing advisers to select the tax wrappers, product providers, funds, investment trusts, discretionary managers, etc. that are suitable for their client’s needs. This satisfies one of the FSA primary concerns as they 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."
Extensive Product Range – This follows from the above "whole-of-market" approach of the Ascentric platform as it enables advisers to select a product wrapper from a range of providers that will meet the needs of the client. This is a critical issue for the FSA as their conclusion was that "at present, life and pensions products are not "benign" wrappers. Life and pensions products generally involve varying charges and product features that mean some life or pension products are suitable for some customers and not others". The FSA concern is if a single product is available on a platform and is the only one offered to clients, this may not constitute independent advice nor satisfy the client suitability test.
Clear & Transparent Charging – All adviser fees, Wrap charges, fund rebates and Product costs are shown as clear and transparent client postings on the Ascentric platform. This approach directly supports the FSA view that "whatever the basis of remuneration, clarity for the consumer is essential" and "The key requirement is for a firm to provide a customer with clear disclosure of the overall costs (of advice, of the platform services, and the underlying products and investments)". In common with the FSA we see only a limited future for old style bundled products and obscure pricing of advice, products and services.
Adviser Focus – The Ascentric Wrap platform was founded by IFAs to ensure that the service is focused on the needs of IFAs and their clients. All IFA users are able to contribute to the direction of the service and the priorities for development. An active user group, led by an IFA firm, exists to provide a forum for feedback and to influence the direction of the platform to ensure its continued success in meeting adviser needs.
Adviser Branding – A founding principle of the Ascentric Wrap is that it would serve to enhance the relationship between the IFA firms and their clients and strengthen the IFAs own brand. To support this ethos the Ascentric platform provides client access via the firm’s website and can brand all the Wrap screens as the IFA firm to reinforce the firm’s connection for its clients.
IFA Participation – As a platform founded by IFAs for IFAs, all adviser firms using the Ascentric platform are able to participate in the capital growth of the business based on the assets placed onto the platform by each IFA firm. This had been raised as a potential conflict of interest by certain life company platforms. The FSA clarified that this was not an issue as long as a firm "with a financial interest in a platform must manage conflicts of interest effectively" and disclose that interest. We have always ensured full disclosure of potential IFA participation in Ascentric and very much welcome the FSA clarification on this issue.
Efficiency & Cost Effectiveness – The Ascentric platform has a cost structure that normally provides a cost neutral or better position to clients whilst also offering the client an improved service, a wider choice of investments and products, plus online access to their portfolios. From an adviser perspective the Ascentric service provides an efficient platform to support their clients and a means to improve their brand and the intrinsic value of their business. In particular, we feel that Ascentric supports the FSA objectives in that "Our view remains that the customer should be at the heart of any decisions made by a firm” and “we welcome any industry developments in establishing good practice, for example in areas such as charges, disclosure and common terms".
For further information on Ascentric or feedback on the above, please contact:
Nick Jones, Head of Sales – Telephone: 07515 284947
For more FSA information, on this and many other subjects, please visit www.fsa.gov.uk
For full printable versions of the Discussion Papers, Feedback Statements and Interim Reports please click on the links below
Discussion Paper 07/2 - Platforms, the role of wraps and fund supermarkets
Feedback Statement 08/1 - Platforms and more principles-based regulation (feedback on DP07/2)
Retail Distribution Review - Interim Report (April 2008)
|
