The next major business challenge for adviser platforms will be implementing the Financial Conduct Authority’s (FCA) sunset clause on payments relating to legacy business with fund managers, according to Altus Consulting.
Following the FCA’s PS13/1 statement, published in April 2013, platforms had to ensure that all payments between fund managers and platforms ceased for new business from 6 April 2014. However, they were allowed a further two years to phase out such payments for existing business – the so-called ‘sunset clause’.
With less than 18 months remaining, Altus Consulting believes some platforms are only now beginning to confront the significant operational challenges and potential tax liability issues for their customers.
Altus consultant, Ben Hammond, says: “Although sometimes forgotten, the customer must be the central focus here. As with adviser charging, consent is required to set up new charging structures and this needs to be obtained as soon as possible – certainly from 6 April 2016. That potentially creates some practical challenges for those who wish to keep their income flowing.
“It is essential that platforms work closely with their advisers to sell the value of their service to customers and then transition them into clean share classes and adviser / platform charging. Some platforms have been running an explicit proposition for several years pre-RDR, possibly in parallel with a bundled offering and so could be fooled into thinking the task is easy.
“That could be a costly mistake; ‘sunset’ may seem a long way off, but there is a lot to achieve in a very short space of time.”
