REG - Hargreaves Lansdown - Response to the FSA's Consultation Paper CP12/12
Hargreaves Lansdown notes the FSA's Consultation Paper CP12/12 ("The Platform Consultation Paper") published on 27th June 2012.
The Financial Services Authority's (FSA) Platform Consultation Paper builds on earlier messages given by the FSA that they wish to proceed with a ban on Platforms being remunerated by fund groups. The FSA's position does not come as a surprise, and our planning has been focussed on a "no payments to Platforms" outcome.
The latest Paper is a consultation paper and clarity will not be available until the FSA issues a final Policy Statement. We firmly believe our business model is flexible enough to deal with any changes we may need to make when the FSA finalise their rules. We are confident we have solutions that will work for our clients.
We note that the FSA intends to confirm new platform rules before 31 December 2012 but not introduce them until 31st December 2013. We welcome the fact FSA has clarified the timescale for any changes to rules governing the platform market. This reduces the regulatory uncertainty that Platform firms have faced to date whilst also giving adequate time to prepare.
We will continue to engage with the FSA during the consultation period. We do not anticipate announcing any changes to our business or our charges until after clarity is provided in the final policy statement.
We note the FSA's comments and questions in the paper about potentially extending their principles on platform remuneration to cover other regulated firms such as Life Insurance Companies, rather than just focus on platforms. We welcome this as a positive step in considering consistency and a level playing field, and is an issue on which we have campaigned for some time.
We remain relaxed about the overall outcomes of the Retail Distribution Review. Whilst the RDR may have become rather over-complicated and drawn out, its original principles were laudable and it should hold no fears for companies with a loyal and satisfied client base. Investing directly is becoming increasingly popular, is already excellent value for clients and Hargreaves Lansdown remains the market leader in providing this service. Our most recent client satisfaction survey has just confirmed 98% of clients rate the Hargreaves Lansdown service as good, very good or excellent. We expect to be able to continue to deliver strong growth in assets under administration.
We have previously stated we expect prices for retail investing to continue to reduce gradually over time, which will be good news for retail investors. We believe this gradual reduction will be driven mainly by the efficiencies of technology and growing scale, and offset by volume increase in the market. We do not see this path altered particularly by RDR. We do not currently believe any potential changes to our business model to respond to the FSA's RDR proposals will materially affect our service levels or profitability given our strong client base, high asset retention and exceptional service levels. We have already developed alternative revenue and charging models that would be compliant with the FSA's proposals. Hargreaves Lansdown has historically successfully used a range of methods to earn income for facilitating a wide range of client investments on the Vantage service.
Hargreaves Lansdown remains committed to offering retail investors the best prices, best service and best information.
For further information please contact:
Hargreaves Lansdown +44 (0)117 3171638
Ian Gorham, Chief Executive
Danny Cox, Media Relations
This information is provided by RNS