Guidelines detail tougher fee disclosure regime for platforms

Payments received by financial planners for using master trusts and wrap platforms are set to come under increasing scrutiny, with two key industry bodies close to signing off on a tougher set of disclosure guidelines for their members.

As reported by Money Management last month, the Financial Planning Association (FPA) and the Investment and Financial Services Association (IFSA) have been reviewing payments made by platforms to advisers and have released a draft set of guidelines for comment.

Under the guidelines, planners are required to inform their clients that they are receiving ‘commissions’ if they receive payments relating to their use of a particular master trust or wrap. These payments are currently referred to as rebates, which is considered potentially misleading for consumers.

FPA board member Sarah Brennan, who is a member of the joint FPA/IFSA working party on platform rebates, says it will be meeting in the next few days to sift through the submissions, but the guidelines appear to be well-received.

“The initial feedback I have had is that the responses have been positive and that disclosure should be more defined and consistent,” she says.

According to the draft guidelines, the main objective was to introduce clear standard definitions on rebates and their disclosure.

Brennan says disclosing rebates needs to be understood by the consumer as well as the industry.

“There is also the danger that you can over-disclose and that will confuse the consumer,” she says.