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Experts warn 2016 reforms will end historic adviser trail

James Robson: Trail will be finished by 2016

Experts are warning that adviser firms need to factor in the end of historic trail commission alongside the April 2016 deadline for legacy payments between fund managers and platforms to end. 

Speaking at the Money Marketing re-registration round table last week, Plutus Wealth Management, Nucleus and International Financial Data Services said firms should not be relying on trail as a source of income.

The Financial Conduct Authority’s April policy statement confirmed a ban on cash rebates but allowed unit rebates to continue but with a 20 per cent tax charge applied to rebates from unwrapped investments. The paper also stated all legacy payments between fund managers and platforms would be banned from 6 April 2016. 

The paper did not specifically ban historic trail payments to advisers after this date, although experts suggest these payments are likely to end as a consequence of the reforms. 

Plutus independent financial planner James Robson said: “We think it will be gone by 2016. I think there will be a lot of firms out there worrying about what they are going to do and a lot of consolidators who have acquired firms on the basis of recurring income who are equally worried.”

Nucleus chief executive David Ferguson says: “I think the end of trail will actually be before then, because every time there is any kind of disturbance event on an investment after April 2014, the trail will effectively end.

International Financial Data Services group execute David Moffat says: “The paper might not read as though platform trail will be coming to an end but that may certainly be one of the consequences.”

Skandia UK managing director Peter Mann says the regulator still needs to provide more clarity around platform trail to advisers.

He said: “I still think we need some more information from the FCA as to how things are going to work because it has not actually banned trail to advisers.”



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There are 3 comments at the moment, we would love to hear your opinion too.

  1. Don’t need to be an expert!

  2. What concerns me far more is who will benefit from cessation of trail.

    Will it be the adviser? Nope.

    Will it be the client? Let’s hope so, but unlikely.

    Will it be the provider? Could be!!!!

  3. Trail from PPs comes from encashing the units. this is a completely different concept altogether, nothing to do with rebates. So I don’t think this article is correct, and trail will carry on.

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