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Skandia looks to retain unit rebates within clean share classes

Skandia Building 480

Skandia says it will move to a clean share class model but look to retain smaller unit rebates to investors.

This follows HMRC’s decision to tax rebates to investors from April.

Standard Life and Skandia had planned to use a unit rebate model on their platforms but both acknowledged they would need to make some adjustments following HMRC’s decision.

Skandia will move to a clean share class model, with charges typically of around 0.75 per cent, but look to retain unit rebates to investors where possible. Skandia says the smaller unit rebates will minimise tax exposure.

It brands this an “immediate solution” and suggests it will also be looking for fund groups to launch preferential share classes in the future.

Standard Life yesterday announced it was moving to a clean share class model and would look to the fund groups to launch preferential share classes with lower costs to the investor than the market average. It says it will also offer unit rebates it has negotiated within the new share classes as an interim measure.

A statement from Skandia says: “Following discussions with a significant number of fund groups about the impact of HMRC’s decision to tax rebates Skandia has decided to take this action in order to provide a swift and positive solution for advisers and clients. It will continue to work with its fund group partners to ensure that its customers always receive the best terms currently available.

“This could be a combination of existing clean share classes with rebates or new preferentially priced versions that offer a lower annual management charge. Moving to clean share classes that already exist in the market and paying a rebate is expected to be the more immediate solution but does not preclude moving to preferentially priced share classes when available.”

Skandia UK managing director Peter Mann says: “We will continue to seek the best terms in the market to maintain our competitive net fund prices.  

“Whilst new share classes with lower AMCs specific to our platform are an option, it has become evident that the quickest way to negate the effect of tax on rebates for our customers is to move to clean share classes that are already available and to continue to pay a unit rebate to customers, albeit at a lower level, to maintain the beneficial terms we offer to customers.”

Moves by the likes of Standard Life to access preferential share classes based on scale will raise the eyebrows of platforms with similar or greater amounts of assets and smaller players who think they are on their way to similar levels.

Axa Elevate says it expects to have access to any new share classes launched by fund managers.

Managing director David Thompson says: “As and when fund managers make new enhanced clean share classes available we would expect to provide access to these through Elevate to ensure we continue to provide clients with the best possible value in the most simple and transparent way possible.”


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There are 4 comments at the moment, we would love to hear your opinion too.

  1. It seems to me that one clean share class across all platforms, but with varying (taxable) rebates negotiated based on buying power, is considerably preferable to multiple platform specific share classes.

    The latter sound like a complete nightmare to me.

  2. Overcomplicated as usual 5th April 2013 at 10:44 am

    I know its a problem of the FSA and HMRCs making, but the prospect of having multiple share classes with minutely different effective amcs depending on how you but it is so ridiculously complex and not at all client friendly (reregistration?!?!) that the FCA should step in IMMEDIATELY and insist that funds can only offer one version of each unit type – eg a retail class of unit (presumably to offer to direct investors), an institutional share class (ie high mins) and a clean share class (ie via platforms if they so choose)

  3. If all investment firms agreed to offer a single clean share class for all of their funds then this whole issue would be sorted overnight. Forget, R, A, Z, I etc, a nonsense!

    No tax issues for the client, less cost to the investment firms, and in theory less reason for them to incerase their TER’s as they wont have a shambles of a list of classes. Who wins, the client. Surely thats what this is about. Come on FCA, get stuck in and get this nonsense sorted immediately.

  4. RDR transparency is starting to be feel like pension simplification. Yet again HMRC and the regulator have big ideas but fail to produce the goods for the client. Come on new FCA let’s see if you can get this right for the clients.

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