In line with their efforts to do away with embedded commissions, British regulators unveiled new rules Friday that will put an end to the manufacturers of so-called platforms (similar to wrap accounts) funding their distribution.

The UK’s Financial Conduct Authority (FCA) published new rules that will require that investors explicitly pay for platform services. They will no longer be able to be funded by payments (known in the industry as ‘rebates’) from product providers.

Currently, investment managers pay a rebate to platforms in order to have their products included on the platform. And, this rebate comes from the management fees which are paid by the investor to the fund manager. The FCA says, as a result, platforms are able to give the impression that they are offering a free service, which means that the investor may not understand the true cost of the service.

Also, the regulator says that it can be difficult for investors to compare prices and products available on different platforms. And, it says there is a risk that “these payments could lead to product bias in the investment market.”

Many of the same concerns underly Canadian regulators recent examination of the fee structure of the mutual fund industry. In that case, they are worried about the distorting effects of embedded trailer commissions, and have proposed a number of possible regulatory responses, including requiring the unbundling of those commissions, or banning them outright.

The regulators have not yet proposed any particular course of action for the Canadian industry, which has largely opposed the suggestion that any reform is necessary.

In the UK, the FCA says it is making changes “to ensure that investors can make fully informed choices if they wish to use a platform and understand what they are paying for the service the platform provides.”

The new rules will come into force on April 6, 2014 but platforms will have two years to move existing customers to the new explicit charging model. At the end of the two year transition period (in April 2016) platforms will have to charge its customers a platform charge for both new and existing business.

“These rules ensure that platforms put customers at the heart of their business. Customers will know what they are paying and the service that they can expect. These changes will allow both investors and advisers to compare the costs of investing through different platforms and make an informed decision on whether using a platform represents good value for money,” said Christopher Woolard, director of policy, risk and research at the FCA.

“We are encouraged to see signs that the market has already started to move to products which have transparent charging structures that help consumers in anticipation of this change,” he added.