Sunset Clause

The FCA’s Platform Policy Statement in April (PS13/1) confirmed the ban on cash rebates above £1 per month, per fund from April 2014 for new business and all legacy payments between fund managers and platforms from April 2016, otherwise known as ‘the sunset clause’. 

The resulting outcome is that trail commission will cease and there has been an industry move towards clean share classes and fully transparent pricing.

From 6 April 2016 the FCA’s rulings will come into effect regarding how platforms should be paid for assets they hold on behalf of clients. Any adviser firm using a platform that wants to continue to receive remuneration on its pre-Retail Distribution Review (RDR), commission-paying business after April 2016 needs to take action to move business into its own adviser charging model.

The FCA believe that the best way of improving transparency in the platform market and removing the potential for bias is by ensuring the consumer pays a platform charge to the platform for the service provided.

The policy statement can be found here.

Important Note: ATEB news is intended to provide general information ONLY. The content, including any views expressed or guidance provided, does not replace the need to comply fully with FCA Rules and Guidance. Unless you have discussed news article content with ATEB, and specifically how it relates to your circumstances, then ATEB disclaims all liability and responsibility and actions arising from any reliance placed upon it. For the avoidance of doubt therefore, any reliance you place on such information without our consultation is at your own risk.

ATEB Compliance offers compliance and regulatory advice.

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Our View

Many platforms have being engaging with advisers about this over the last few months and a number of advisers have already segmented their clients and made good progress on moving clients to adviser charging. Although this is aimed at platforms some providers may take the opportunity to stop paying commission on other products.

Action Required By You

This is simply a timely reminder. We suggest that you should:

  • Calculate how many clients this will effect and how much revenue you stand to lose.
  • Devise a strategy for contacting clients and informing them of the changes and for moving them to adviser charging.
  • Consider how to deal with clients who don’t respond and with those where you no longer wish to have an ongoing relationship. 
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About the Author

Steve is an ATEB Director and has a deep understanding of all matter regulatory, built up over his 30 years + in the industry. With a training background and a technical brain, he overseas numerous complex projects and client implementation work.

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