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0.3% deal threatens to widen squeeze

The deals that Standard Life has struck with the fund groups on its panel could lead to a crippling margin squeeze as rival platforms seek similar agreements with fund firms.

Industry observers believe that by agreeing to run money at 30 basis points, as some groups are believed to have done, the panel members have prompted rival platforms to reassess their existing fee structure.

Skandia, which has a renegotiation clause triggered when any group signs another deal undercutting its own, is understood to have already been approached by firms resigned to striking a new agreement.

The groups are likely to argue that the Standard deal will pull in enough money to justify the institutionallevel rates. However, observers warn that this could cause problems in running the funds themselves.

Hargreaves Lansdown head of research Mark Dampier says: “The groups are asking for trouble. In the end, they could destroy their own margin. You have to get a hell of a lot of money to make it work but then will the funds perform?” One industry source says: “It will have a major impact. The platforms will turn around and ask why they are paying far more, especially if they hold a lot of their money. They will want a similar deal and that will really squeeze the groups.”


Free test is offered to IFAs for Funds Library

Hargreaves Lansdown is offering 600 IFAs and stockbrokers six months&#39 free subscription to Funds Library, its online index of mutual funds. The online database, set for launch in the second quarter of 2004, has secured the support of 20 fund firms and covers over 410 retail funds. HL is presently embarking on a full technological […]

Abbey extends Choice Income Bond availability

Abbey for Intermediaries has extended the availability of its Choice Income Bond, which will now remain open until December 15. Initially intended only to be available until December 9, the Scottish Mutual bond offers a choice of fixed annual or monthly income or growth at the end of the five-year term. The minimum investment is […]

&#39CI guarantees will stay but become more expensive&#39

Guaranteed rates will still be available in the critical-illness market in a year&#39s time, according to Lifesearch senior technical adviser Kevin Carr. Following talks with reinsurers and providers, Carr says he is confident that guarantees will still be available next Christmas. In Lifesearch&#39s inaugural quarterly protection market report, he warns that there are likely to […]

Remortgaging will boost lending in 2004 – Mortgage Advice Bureau

The Mortgage Advice Bureau is predicting a significant increase in remortgage business in 2004. It says homebuyers will be keen to take out fixed rates as they will see them as more secure after the recent base rate rise. Chief executive Peter Brodnicki says: “People are scared that rates will rise further and concerned about […]

Responsibility Matters

The latest update from the Sustainable Investments Team at Royal London Asset Management, Responsibility Matters, is now available. In this edition the team look at issues such as the growing acceptance of sustainable investing and technology in China. Read the update here: The value of investments and the income from them is not guaranteed and […]


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