Platforms push FSA for fund manager payment exemptions

FSA Front 480

Cofunds and Fidelity FundsNetwork are asking the FSA to allow some payments between fund managers and platforms to continue after the end of next year for specific work wraps carry out on behalf of fund groups.

The FSA’s latest consultation paper, published in June, proposed the banning of all payments between fund managers and platforms from the end of December 2013.

Martin Davis
Martin Davis

Cofunds chief executive Martin Davis says platforms carry out client notifications and other roles originally associated with fund managers, for which they deserve to be paid.

Davis says: “There are things we carry out and functions we perform for clients which the fund managers used to carry out. The fund managers no longer carry these out and no longer pay for it. We do and as a result we should receive remuneration for that.

“Things such as client notifications and corporate actions are now carried out by platforms because they have the economies of scale. If we carry out roles which save fund managers time and money then we should be able to be paid for that. It is a point we are making to the FSA and have been doing for over a year.”

Ed-Dymott.jpg
Ed Dymott

Fidelity Worldwide Investment head of business development Ed Dymott says: “We are talking to the FSA about whether certain activities should be out of scope of the payment ban. Obviously any payments that are made would be disclosed in full.”

“We feel that payments for corporate actions, fund listing, manual processing, charges for dealing errors and marketing activity should be allowed. If a platform is putting on an event and that cost was charged back to a fund manager it does not seem like it is creating significant challenges to the market. Any of these payments would be covered by the FSA’s inducement powers.”

“We have been in dialogue already with the FSA and I think they recognise the point that is being made.”

Skandia would not comment on whether it supported the stance of Cofunds and FundsNetwork.

In its response to the FSA’s latest consultation, the Tax Incentivised Savings Association said certain payments between fund groups and platforms should be allowed.

Tisa Wrap and Platform Advisory Council chair David Moffat says: “Tisa’s response made the argument that there are certain activities platforms undertake that are triggered by fund managers such as corporate actions or correcting pricing errors which can come at a significant cost to platforms.

“As long as it is clear these costs are non-recurring and not triggered by the platforms themselves then a payment for those activities should be allowed. I think the FSA should be able to make this possible without paving the way for illicit payments to creep in.”

The FSA would not be drawn on whether it would alter the proposed rules in its policy statement, due to be published by the end of the year.

Ascentric managing director Hugo Thorman says he doubts the regulator would offer pragmatism around fund manager payments. He says: “I think the FSA would object to this because it will view it as a way of getting round the current rules.”