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Cap Gemini says standard fund deals can cut costs

Cap Gemini Ernst & Young is urging IFAs and unit trust providers to develop a standardised fund transaction method to avoid what it calls the current “horror show” for conducting business.

In a review of the mutual fund industry, CGEY says providers and IFAs can cut costs and speed up the transaction process by creating a universal payment method with software firms.

It believes this system would enable providers to make cost savings of up to 75 per cent and reduce the amount of time IFAs spend on completing deals and reconciliation.

But it says firms should act quickly to mitigate the pressure on margins brought about by the entry of fund supermarkets and non-financial companies.

It believes IFAs and providers can increase market share if they concentrate their efforts on offering a more efficient service rather than the most competitive price.

Retail funds specialist and author of the report Paul Stratford says: “What is required is for industry participants to work together in areas where there is little competitive advantage so processes can be changed to the mutual benefit of all concerned.”

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