View more on these topics

Cofunds issues fresh sunset clause warning

Cofunds has issued a fresh warning over the impact of moving to clean share classes by April 2016, saying the “worst case scenario” will mean liqudating assets if platforms do not hear back from clients.

In its quarterly adviser magazine Perspectives, published last week, the platform says it is “inevitable” some clients will not respond to requests to move them to clean share classes.

It adds it is continuing to lobby the FCA for a solution for dealing with those clients.

In the article, head of proposition Sam Christopher says: “The worst outcome will be that platforms have 
to liquidate the assets of non-responsive investors, potentially losing valuable tax wrappers and creating tax liabilities.” 

Last year the FCA ruled that platforms would no longer be able to retain fund manager rebates. The rules came in to force on new business form April this year.

They impact legacy business from April 2016 under a sunset clause included by the regulator.

Cofunds plans to move clients into clean share classes before that date. 

Money Marketing reported earlier this month on concerns over the scale of the task posed by the 2016 deadline.

Cofunds says it will be working with advisers in an effort to transition clients into clean share classes and adviser charging before 2016. However, distribution director Andy Coleman has previously estimated the sunset clause could impact up to 600,000 clients. 

At the moment, no specific plans are in place for dealing with clients that have no converted before April 2016, although Cofunds is “lobbying the regulator to offer some kind of ‘sunset’ solution that will enable non-responsive client assets to be converted to the new regime in a way that’s viable for all parties.”

Christopher adds: “Over the next year, we aim to provide supporting data and materials that advisers require to manage their own conversion campaign. Alternatively, Cofunds can approach end-investors on a firm’s behalf.”

Head of marketing Stephen Wynne-Jones says: “We are committed to helping our clients tackle the conversion process with their clients, in order to avoid facing any problems come the deadline. With our current plans in place and the initial conversations we are having with our clients, we and they do not envisage any particular problems come 2016.”

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There is one comment at the moment, we would love to hear your opinion too.

  1. what is all this nonsense ” liquidating assets” ? who gave cofunds authority to do that ? The worst case is simply that funds be moved to clean – nothing more complicated.

Leave a comment

Close

Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm

Email: customerservices@moneymarketing.com