Skandia pulls offshore bond from platform
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Skandia has closed the offshore bond on its platform to new business due to lack of demand.
The Royal Skandia offshore bond remains open to new business.
The platform offshore bond was closed to new business last month, but will continue to receive top-ups on existing business.
A spokesman for Skandia says the offshore platform bond accounted for less than 1 per cent of funds under management.
In August the offshore platform bond accounted for 0.3 per cent of platform sales.
He says: “Demand is proving that the Royal Skandia offshore bond is the solution that IFAs are recommending. We are still very much active in the offshore bond space in the UK.”
However Skandia says there are no immediate plans to make the Royal Skandia offshore bond available on its platform instead.
The spokesman adds: “We will obviously continue to monitor the range of wrappers we have on our platform and demand from advisers and meet that demand appropriately.”
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Readers' comments (6)
david | 18 Oct 2011 10:47 am
The offshore bond on the platform did not re claim the tax on the underlying funds, like nornal ones it also excluded guernsey residents even though it was based in Guernsey, thats why we did not sell it.
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Good advice? | 18 Oct 2011 12:38 pm
If the SIS platform is utilised as an asset of the Royal Skandia offshore bond I understand it results in having net nominee inside a gross wrapper. This means that any interest bearing investments have tax deducted at 20%? I have been told that this is not reclaimed. Can Skandia please confirm what the position is? This would appear worrying if clients have been recommended an investment that is tax efficient to find that it may be highly inefficient.
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nigel | 18 Oct 2011 12:46 pm
David - Royal Skandia do not reclaim tax paid on distributions in respect of Fixed Interest funds and property funds based in the UK. This means that the investor will have paid tax twice when the money is repatriated. If the fund has a share class that pays distributions gross, then that's fine, but not many do. Ostensibly cheap charges do not make up for overpaid tax. EG a client invests £100,000 in a Royal Skandia offshore bond using a uk corporate bond fund. Say the distribution is 5% (average for a corp bond), the tax dediucted will be £1000. No tax reclaim = an effective charge of 1% EVERY YEAR on top of the other charges. BEWARE.
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Concerned | 18 Oct 2011 2:45 pm
Beware indeed! It begs the question of why their sales force were extolling the virtues of using the platform in conjunction with the offshore bond to achieve "the best of both worlds", when in reality they are encouraging IFAs to offer clients the magical world of gross roll up whilst in reality promoting a tax inefficient solution.
Disgraceful!
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Anonymous | 19 Oct 2011 6:42 pm
Just ask all your broker consultants who provide offshore bonds if they are registered for gross payments on fixed interest funds, you maybe shocked, it might possibly be only ONE who has bothered.
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Paul Davis | 20 Oct 2011 10:41 am
If you were to use an offshore share class this would be considered a Ucis so again be very aware!!
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