FundsNetwork has been criticised for failing to pass on extra trail commission offered by Standard Life Investments on one of its funds.
Standard raised the trail commission on its UK equity high-income fund in February 2005 from 25 basis points to 50bps. Cofunds has passed on the extra commission to intermediaries but Fidelity-owned FundsNetwork has been retaining the added trail.
Inflows of £105m have boosted Karen Robertson’s Standard fund to £392m.
Broker Intelligent Money says one of its clients has written to the FSA after two requests to Fidelity to make the extra commission available were met with unsatisfactory replies, initially blaming a computer error, followed by saying rebating the trail payments would contravene FSA regulations. Fidelity claims its systems would have to change to meet the revised terms and says that client charges will be unaffected.
Intelligent Money says it would forward any extra commission to clients.
IM chief executive Julian Pennistone-Hill says: “This is one of the major funds at one of the major platforms and they have been keeping what is due to the intermediary.
“Trail commission is hard to track so if someone like Fidelity is citing computer system problems or FSA regulations to the client, then it makes you wonder what else is going on.”
Fidelity director of UK corporate communications Richard Miles says: “This holds a relatively small amount of assets. We try to mirror commission the provider offered when it established the relationship. When terms change, we must inform all existing clients through full disclosure. This is a wider issue that we intend to raise at the next platform committee meeting.”