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RBS returns to advice with robo offering

RBS Royal Bank of Scotland 440Royal Bank of Scotland has joined rivals like HSBC in launching an automated investment advice service for more than five million customers.

The bank claims to be the first bank in the UK to launch a “fully regulated” robo-advice service, which will be under its NatWest brand.

The service, live from Monday, is targeted at consumers with £500 or more to invest as a lump sum.

There will be a range of five risk-rated index funds investors can chose from across the existing NatWest Invest platform. Charges for the funds are capped at 0.6 per cent.

Those wanting to invest will pay £10 for receiving advice.

The bank says after selecting their investment goals, customers will receive “fully regulated” advice on how much they should invest, the most suitable products for them and how to use their Isa allowance.

NatWest Invest managing director of premier banking Phil Northey says: “At NatWest we are very focused on meeting our customers’ needs and it is clear that too many of our customers are not able to get the investment advice they need. Their expectations are also changing.

“They are increasingly choosing to bank with us digitally. We have responded by launching an online investment advice service. This will help our customers to get on in their lives and to achieve their financial goals. We’re proud to be the only UK bank offering such a service to our customers.”

In January 2016, Santander kick-started banks’ journey back to the market, less than two years after it was hit with a £12.4m FCA fine for poor advice.

RBS rivals such as Barclays and HSBC have also announced they will enter the robo-advice market this year.

Platforum head Jeremy Fawcett says: “Most of the branch-based advise teams were disbanded after the RDR but we knew that it wouldn’t be a permanent exit for the banks. The question was how to do it without risking a PPI-style nightmare.

“Execution-only robo advisers have been the centre of attention for a while, but online regulated advice services are arriving. NatWest Invest will join 2017 launches from Evestor, Munnypot, Investec and UBS. Other high-street competitors are working on new services as well.”

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Comments

There are 6 comments at the moment, we would love to hear your opinion too.

  1. As I have said before, to my old friends Marconi & A.Bell, it will never work!! I do hope their compliance departments are interviewing additional staff, I thought the whole concept of the RDR was to remove Advice from the Product, “O” I forgot SJP! the Advice charge is not £10, its £10 plus the 0.6% as both are subsidising the facilitation of the Advice remuneration. Or am I missing the FCA rules on Cross Subsidising of Regulated Advice.

    • Now that is a very good point. If Vanguard’s non advsied platform is at an average of 0.14 fund charge and 0.15% platform charge + 0.29% all in…… The bank knows that advice is where all the risk is and F-pack fees for FCA, FOS and FSCS are paid on the advice charge income, not on the platform and fund charge income, then this is getting away with paying reduced F-pack fees by artificial cross subsidisation.

      • Why would you think fees are only based on advice income? They are paid on all income – the vast, vast majority of financial services firms do not provide advice.

        Do you think Goldman/state street/citi pay no regulatory fees?

  2. COBS 6.1A.14R states:

    “A firm must not use a charging structure which conceals the amount or purpose of any of its adviser charges from a retail client.”

    Guidance at 6.1A.15 states:

    “A firm is likely to be viewed as operating a charging structure that conceals the amount or purpose of its adviser charges if, for example:
    (2) it provides other services to a retail client (for example, advising on a home finance transaction or advising on an equity release transaction), and its adviser charges do not represent a reasonable proportion of the costs associated with the personal recommendation for the retail investment product or P2P agreement and its related services.”

    People can make up their own minds what this means.

  3. I can see this coming a mile off. A complaint? It wasn’t us Guv- it was the computer and the punter made his own decision – so go whistle for your compensation.

  4. Just another thought, Under MIFD 11 if having acted upon the £10 Regulated Advice can the Robo Advice firms review the clients after a 10% Drop in their Fund, as usual I expect not, The best way I can put Robo Advice is the Owners of these firms are a kin to the main character in the Film “Salience of the Lambs” and you know the sound from coming from his lips.

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