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Skandia axes trail on Somerset emerging markets fund

Skandia has scrapped trail commission on the Somerset Emerging Markets Dividend Growth fund, saying the trail should never have been paid.

The platform wrote to 5,000 advised clients invested in the £403m fund to inform them the 35 basis points trail commission would be removed with effect from 29 November.

The letter, seen by Money Marketing, states: “The nominated trail commission your adviser receives is partly paid for by the fund trail commission from the fund manager. Therefore, if the percentage nominated trail commission you have agreed to pay your adviser is greater than the new rate of fund trail commission, we will have to sell more units from your investment each month to pay your adviser.

Skandia says the decision to remove trail on the fund was because it should never have been paid.

A spokesman says: “The Somerset Emerging Markets Dividend Growth fund launched on 9 July 2012 and was set up with an incorrect fund based commission rate of 0.35 per cent. It should have been 0 per cent.

“We have contacted advisers with clients invested in the fund to make them aware of the change. We will not be seeking to reclaim the commission and apologise for any inconvenience this may have caused.”

Skandia says it has paid a total of £10,000 in trail since the Somerset fund launched on the platform.

Somerset declined to comment.

Jacksons Wealth Management managing director Pete Matthew says: “The issue really is around how the communication is carried out. I am not sure it is Skandia’s role to effectively force the issue of adviser charging with existing pre-RDR clients.” 

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