Platforms have been part of the RDR consultation for a number of years and we are facing consultation overload. The FSA needs to implement its ideas even if, as framed, I believe they are flawed.
Part of my belief comes from a concern that, in addressing concerns relevant to the principles of RDR, the door to a wider review of manufacturing and wholesaling in retail financial services has been opened. Close this too early and the market is distorted. Keep going and the scope creeps ever wider.
The main points of the consultation came as no surprise:
The first three issues are well-trodden ground which I won’t go over again. I’ll simply comment that the day the consultation was published felt like a mid-term by-election results day. Reactions came in from all industry quarters. No- one got the result they wanted, but everyone claimed a victory of sorts.
It is adjacent markets on which I’ll concentrate.
In getting this far the FSA has already struggled with that bane of major projects, scope creep. It is like decorating a house. You decorate one room and need to move on to the next. Before you know it, the whole house needs to be redecorated. The question is, where do you stop? My view is either the whole house is redecorated or we shouldn’t pick up the paintbrush.
Why?
As a firm which has expanded its SIPP offering to include an ISA and GIA, it feels like we are now doing what we have always done, just across three products. I see no logic in excluding SIPPs.
RDR is pushing more advisers towards discretionary fund managers, sometimes independently and sometimes in conjunction with a platform. Ditto.
I struggle to see how execution-only stockbrokers don’t fall under the platform definition. I think the FSA has included discount brokers with execution only brokers, as they typically would not be caught under the custody/settlement part of the platform definition. Ditto.
Leaving insurance companies on the sidelines conjures up conspiracy theories which are best avoided. Ditto. The fish test works. If it looks like a platform, tastes like a platform and smells like a platform then it probably is a platform. However, I would wager firms are looking to challenge whether they are a platform in anticipation of adjacent markets being excluded. Whether there are ways of structuring themselves to avoid some or all of the restrictions, time will tell. My clear preference is that the FSA preserves the integrity of a fair market by treating all types of product and service provider consistently.
Andy Bell
CEO
A J Bell