Fund managers have rushed to reassure advisers that they will not follow Witan Investment Services in cancelling trail on pre-RDR business.
Last week, WIS managing director Graham Hunnisett wrote to advisers saying it will cease paying trail and initial commission for all business written prior to the RDR, from 31 December.
The change is being made to the Witan Wisdom terms and conditions, which affect Isas and share plan accounts.
Legal and General Investments, Ignis Asset Management, Fidelity Worldwide Investments, Threadneedle Investments, Henderson Global Investors, Kames Capital, Investec Asset Management, Jupiter and Standard Life all say they will continue to pay trail on business written before 1 January 2013.
Legal and General Investments managing director Simon Ellis says the firm will continue to pay trail commission on old business.
He says: “It is a matter of trust for advisers; they expect providers to honour their commitments.”
Ignis Asset Management head of UK retail Austin McBride says it is difficult for providers to switch off trail. He says: “If fund managers are committed to paying commission on their backbook, it is very difficult in operational terms to switch it off. We are committed to continue paying trail on old business due to contractual terms.”
Kames Capital head of retail sales Steve Kenny says switching off commission payments would breach the terms and conditions of the business. He says: “Client demand will lead advisers to naturally move their backbook of business to a clean fee-share class, but this should be led by clients, not by product providers telling advisers what to do.”
Highclere Financial Services partner Alan Lakey says: “I would expect all firms to maintain their agreements with advisers because there is no regulatory reason not to continue paying trail on old business.”