The Office of Fair Trading has begun a preliminary investigation into whether fund managers are entitled to try to stop IFAs from rebating trail commission.
The inquiry could cover three of the UK's biggest fund managers – Fidelity, Schroders and Threadneedle. All three companies have said they are considering withdrawing trail commission for IFAs rebating it to their clients.
The complaint, brought to the OFT by IFA Chartwell, highlighted Fidelity and Artemis and follows Chartwell's well publicised dispute with Fidelity.
Artemis is currently the only UK fund manager not to pay trail to IFAs which rebate the money to their clients – a practice it says has been in its contract since its launch in 1999.
But Chartwell says it was not covered under Artemis's terms and conditions until last May. It claims it rebates trail commission to several clients who had bought the Artemis funds before it agreed the terms.
However, Artemis managing director Jamie Campbell says: “We have had the same terms and conditions since we started. If Chartwell has ever rebated trail to its clients, it has been in breach of our terms and conditions.”
Meanwhile, Chartwell's dispute with Fidelity continued this week as Chartwell confirmed that it would continue its trail commission rebate service despite Fidelity's threat to withdraw trail payments on January 31, when its new terms and conditions took effect.
But Fidelity has now said it has no plans to stop trail payments to Chartwell as long as discussions between the two firms continue.
Chartwell chief executive Craig Wetton says: “We are getting a lot of support from other IFAs that are annoyed that a product provider is telling IFAs how to run their business.”