threesixty Calls For Platform Providers To Help WRAP Users or Vet Them
threesixty, the IFA support services provider, has called on wrap providers to either support IFAs using their platforms, or vet them to ensure they understand the compliance requirements they must meet. The warning follows the Financial Services Authority’s recent discussion paper on wraps and also relates to the implementation of MiFID from November 2007.
Under MiFID, product providers and platforms would no longer be required to issue clients with product literature post sales. Instead, responsibility for this would fall to IFAs. This places even more emphasis on the ability of the IFA to communicate the required regulatory information.
Yet disclosure to clients would become even more complex if IFAs use wraps: proposals in the discussion paper on wraps would require IFAs to communicate charging structures and their remuneration methods, including share ownership schemes, to clients in a clear and understandable manner.
threesixty believes platform providers should vet IFAs to ensure they are able to provide clients with the necessary information in an effective manner and if necessary, they should provide guidance and assistance. Wrap providers should also reach a consensus on what is acceptable terminology.
Phil Young, Partner at threesixty services, commented: “The vast majority of IFAs provide clients with full information and product details at the point of sale. But the requirement for disclosure around wrap is complicated and potentially difficult for those IFAs with limited access to good quality compliance guidance. They will be using platforms in a regulatory vacuum.
“Wraps should only be made available to those firms that can demonstrate a sound knowledge of the disclosure requirements and have systems and controls robust enough to manage wrap assets. This need not be unduly burdensome and should not have any cost implications for smaller firms, but some form of screening should be encouraged to protect the reputation of the industry.
“The FSA has made it quite clear that it intends to give the industry the opportunity to develop regulation in this area, and it is important we take this opportunity responsibly.”
threesixty has been advising its clients over the last 18 months on the issues contained in the wrap review and its recent Retail Distribution Review. It provides full factsheets on each of the platforms, wrap suitability letters and hands-on training and assistance for client firms wishing to adapt their business models to make better use of wrap platforms.
Advisers can obtain a copy of the threesixty ‘View on Wrap’ document, by visiting the threesixty website at http://www.threesixtyservices.co.uk/.