Consumer Panel says FSA should ban all platform rebates

gadgetmind

Lokolo wrote: »

gadget mind has already said he doesn't like the cost hes paying and yet won't move?

HL is not the only platform I use, but I do like their service for some of the funky stuff I do with share options and ISAs. They aren't bad for the few funds I hold in ISAs, and they are OK for our unwrapped investments, but pensions are elsewhere and next year's ISA etc. may well go somewhere different.

I was waiting for the RDR decision before going to the effort of moving stuff, but now ...

Aegis

gadgetmind wrote: »

I've looked at holding their trackers, but I have a sneaking suspicion that they'll change the fee structure of these at some point. That point will probably be just as I've gone to the effort of setting it all up!

Certainly a possibility in light of the report this week!

dunstonh

gadgetmind wrote: »

I've looked at holding their trackers, but I have a sneaking suspicion that they'll change the fee structure of these at some point. That point will probably be just as I've gone to the effort of setting it all up!

Seeing as the bundled platforms run these as loss leaders and wont be able to (or logically wont be able to) in future, then its almost certainly that they will cost more once explicit charges come in.

westy22

Personally, I think that they will redress this HSBC tracker 'anomaly' long before explicit charging comes in. This loophole is now so widely publicised and used by HL investors that I doubt it will continue for much longer. I wonder how many of us 'trackies' will vote with our feet when they do?

dunstonh

westy22 wrote: »

Personally, I think that they will redress this HSBC tracker 'anomaly' long before explicit charging comes in. This loophole is now so widely publicised and used by HL investors that I doubt it will continue for much longer. I wonder how many of us 'trackies' will vote with our feet when they do?

The same issue has occurred with Skandia where the Blackrock trackers have become too popular.

Porcupine

Lokolo wrote: »

how would it be if every consumer market had to declare where every penny of their products goes to? I would imagine there would be outrage at some of the high end stuff such as Waitrose/JL and M&S, but consumers don't NEED to know this stuff, just know how much they are paying, which they do as the info is on the fund pages.

To stretch the analogy a bit further, it would be useful to know how much a reviews magazine got paid for product advertising by the company whose products it is reviewing. If we saw how much H-L was getting paid by each fund house, we might be able to work out if the funds H-L advertise in the Wealth 150 and by their endless mailings are strongly correlated with such payments. There's a fine line between 'promotion' and 'advice': biased advice is beyond the pale, but it appears heavy promotion is just fine as long as the small print says 'this is not advice'.

I agree the price on the tin is the price on the tin, but such prices aren't clearly stated. First there's the AMC, then there's the TER (which is not always easy to find out). Next there's the rebate. But the rebate only happens under some conditions (not in the SIPP, for example), and not for holdings under £1000, and is paid outside the ISA wrapper. (And then there's another separate of initial fees and bid/offer spreads). So it's not as if the true TER on H-L and the true TER on platform X can be easily compared. For example, why don't Trustnet et al (or indeed MSE) have a function which lists funds by TER when bought from different places? Why maintain this fiction that everyone pays full retail initial charges and AMCs?

dunstonh

The FSA has published another paper. cp11/26 and wrote the following: (bolded the key bit)

2.4 However, to meet requests for clarification by the industry, we are consulting on draft guidance to help firms understand when legacy commission can and cannot be paid once the RDR rules have come into force In addition, we have said in PS11/9, on application of the RDR rules to platforms, that we do not propose, at this stage, to ban cash rebates by providers to consumers, although our preference is to do so following further work. This means that providers will be able to make cash rebates to customers for changes to legacy business if they so wish. We have said that rules to introduce a ban of cash rebates would not be made before the RDR rules come into force on 31 December 2012.

This was also said which may impact on DIY platforms)

2.2 Currently, commission can be and in practice frequently is paid for both advised and non-advised sales of retail investment products. The RDR rules will prohibit the former, but not the latter – so legacy commission can remain payable for non-advised sales.