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Discount dispute at the funds supermarket

I write with reference to the Fidelity Funds Network Supermarket launched last year.It would appear that I have noticed a serious issue and flaw in the Funds Network set-up.

Throughout the past few months, a number of members of the Funds Network Supermarket have offered a generic discount off their initial charges.

For example, for investments of £163.5,000 or more into an Isa for the current tax year, Chase Fleming Asset Management have offered a discount on 2 per cent off their initial charge.

On one particular occasion I recommended a client to invest in the Funds Network Supermarket, including £163.5,000 worth of investment into Chase Fleming Funds, together with £163.2,000 for investment in a maxi Isa with an alternative provider.

This should have meant that the initial charge on the Chase Fleming Funds was reduced from 5.5 per cent to 3.5 per cent due to the discount available from Chase Fleming.

At the time of setting up this Isa, I noticed that the purchase confirmation suggested an initial charge of 5.5 per cent had still been applied. I queried this with Fidelity at the time and suggested that the 3.5 per cent charge should be applicable. They confirmed that the 2 per cent discount would be applied by Chase Fleming once they had received relevant monies.

In January, however,I requested that this be confirmed in writing. I heard nothing and wrote again towards the end of January explaining my concerns about generic discounts available to IFAs and investors who went direct to the company.

Fidelity had insisted that any discounts available from companies would be available through Funds Network. This was repeatedly mentioned during roadshows throughout the year 2000.

I received no response to my January letter and wrote again in February – and again received no response.

Approximately two weeks ago, I contacted them by phone to explain initially my dissatisfaction at not receiving a reply to my letter and I was also informed by the gentleman I spoke to in the Funds Network customer service department that it was the responsibility of the provider, for example, Chase Fleming,to advise Fidelity of any discounts available.

I therefore contacted Chase Fleming to discuss this issue in more detail.They advised that this was nonsense and that any discounts available should be applied. Special discounts available to a number of IFAs for new business are being applied through the Funds Network system.

However, I have spoken to someone in the Funds Network department who has confirmed that generic discounts available from fund providers are not being applied to investments set up through the supermarket.

Therefore, to enjoy these discounts, IFAs must set up these Isas direct with the relevant providers. This, of course, removes a lot of the benefits of the Funds Network supermarket since you cannot of course invest outside of this supermarket wrapper into separate fund providers.

Chase Fleming was extremely concerned at this issue and I spoke to Barry Edwards who is the development manager, who liaises with Fidelity on issues surrounding the Funds Network.

I feel it is my responsibility to advise other IFAs in the investment marketplace of this issue.

I would suggest that the alleged benefits of investing via the Fidelity Fund Supermarket are not as rosy as suggested.

Adam Rowbottom

IFA, Manchester


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