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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.”


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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.

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