threesixty Welcomes FSAs Initial Findings on Wraps
threesixty, the fee-based IFA support services provider, has welcomed the Financial Services Authority’s comments on Wraps following initial research by the regulator.
The FSA resolved to research wraps because of their increasing prevalence in the industry. As a result of that research, it has decided this week not to seek to introduce new regulations covering them. However, the FSA is sharing its research with the industry in order to encourage good practice as well as highlight some of the issues firms should acknowledge. Following its findings, the FSA has also produced a Frequently Asked Questions document on how intermediaries can remain independent when using wraps.
threesixty believes the FSA’s initial comments are encouraging, particularly the regulator’s acknowledgement that intermediaries who use wrap platforms are acting in their clients’ best interests. Phil Young, a Director at threesixty, commented: “We find that those IFAs who have truly grasped the wrap concept offer a level of service above the industry norm. The FSA has clearly gone out into the field to examine the practical realities of wrap usage and this must be encouraged. The FSA has highlighted a number of areas of potential concern, but this should not trouble the majority of IFAs using wraps, provided they have properly prepared their businesses to use such platforms.”
The FSA has highlighted the need for intermediaries to justify the use of wraps, and in particular, where improved servicing is used as a reason to justify higher charges. threesixty has been providing guidance and assistance for some time on how an IFA can segment their client bank and construct sensible service propositions for each segment.
Phil Young added: “By agreeing a well-defined service level, each client knows what to expect and what the costs are up-front. Our research to date suggests that high net-worth clients attach considerable value to higher levels of servicing and are prepared to bear the higher cost of using a wrap, or whatever alternative technology performs the same functions in the future.”