The RDR consultation paper suggests that fund managers could adapt to adviser charging by offering multiple share classes to support different levels of ongoing charges or use platform cash accounts and schemes to allow consumers to sell units at regular intervals.
But the Investment Management Association says share class proliferation would be costly, increase the risk of possible administrative error and could be a nightmare for everyone.
IMA senior adviser of retail distribution Andy Maysey says: “The platform route for paying ongoing commission is also problematic given that not all of them offer cash accounts and neither do all platforms offer all funds.”
Skerritt Consultants head of investments Andy Merricks says: “This is a huge over complication of what really shouldn’t be a complicated matter. With multiple share classes, you’re beginning to go back to the dark days of insurance companies and pension contracts where you had different classes of units which all added to the smoke and mirrors.
“Everyone tries to fix something but it’s whack-a-mole regulation as you beat down one problem and another one pops up.”
Are fund managers right to object over the share class proliferation?
Do the alternative proposals give platforms too much power? By stepping in to process intermediary charges do platforms risk overcomplicating their own structures?
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