Standard Life Investments to scrap trail commission for all retail business

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Standard Life Investments is to stop all trail commission paid to advisers across its UK Mutual Funds range.

In a letter sent to advisers, seen by Money Marketing, the fund manager says all renewal commission paid on the retail class of shares will cease from 31 March 2016.

As a result, the ongoing charges figure will fall across the entire fund range, cutting fees for 90,000 clients. SLI says there is no function to facilitate ongoing adviser charges.

The firm says it wants to align legacy and new business “reflecting the spirit of the Retail Distribution Review”.

Annual management charges are typically being cut by around 20bps.

Currently, renewal commission on bond-type funds is 25bps and 50bps on equity-type funds.

Under the RDR rules, previously agreed trail commission can be paid on pre-RDR investment amounts where products are topped up after 31 December 2012, and on fund switches within a product.

The two-year sunset clause on legacy payments between fund managers and platforms will expire in April 2016.

An SLI spokesman says: “Regulatory change has created anomalies and inconsistencies in relation to how investors pay for financial advice on new and legacy (pre-January 2013) UK regulated business.

“These anomalies will become more pronounced with the implementation of the FCA rules (PS13/1) in April 2016.

“In response to this, we have taken the decision to stop paying renewal commission on all business held in our retail class of shares from April 2016.

“We believe this best reflects the evolving regulatory environment and creates consistency for our clients regardless of when they made their investment.

“Also in April 2016, the Ongoing Charges Figure for all clients invested in our retail class of shares will fall. We are proactively contacting all affected advisers and clients to ensure they are aware of our plans. As part of this communication we are reminding clients who have a financial adviser that they may wish to contact them to discuss these changes.”