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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.”

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Comments

There are 13 comments at the moment, we would love to hear your opinion too.

  1. Leaving aside the technical error in them referring to renewal commission, when they actually mean stopping fund based commission, their letter says the change is “in the spirit of the RDR”. Bearing in mind they’re only reducing the client’s charges by around 0.2% pa, that’s hardly treating customers fairly, as they’re pocketing the 0.3% pa difference. It’s more like they’re acting in the spirit of Scrooge! I’ve made a formal complaint to Standard Life as well as flagging it up with the FCA.

  2. Nothing to do with scrounging a few more quid for their own coffers or trying to cut out the servicing IFA then. If the response of other firms to SL’s ongoing campaign against IFA’s is the same of ours, it may rue its apparent relish in taking this approach in the future.

  3. I do hope therefore that clients will benefit from your reduced charges. (I’ll not hold my breath!)

  4. I guess they can expect to see me across a courtroom

  5. So let me get this straight. You’re stopping a method of payment of 0.25% or 0.50%, which allows clients to pay their adviser. You’re not offering any alternative way of a client paying an adviser from their investment. And you’re only reducing the fees you are charging clients by 0.20%.
    Or to put it another way, you’re increasing the fees charged to clients by 0.05% or 0.30%.

    This is all to improve client outcomes is it?

  6. They are only doing the same as Aegon did with Auto Enrolment and GPP clients 2 years ago, they got away with it. It is all about lining their own pockets. The client is being, in effect, double charged as we will have to start making a charge to the client directly.

  7. Standard Life, Have always been the first, to move the goal posts, cut Advisers out of the equation & cross sell. I gave up trying to do business with them a few years ago.

  8. 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.

    Hmmm I hope this FCA is going to look at this closely.

  9. The FCA will not give a toss so it doesn’t matter whether they look at it. The clients will be better off with lower charges than they are now, that will be the only thing they care about. They won’t lose any sleep if advisers trail is being cut off.
    Like Steve Burton, I have not placed business with Std Life in almost 10 years and boy am I glad.

  10. Don’t know what everyone is moaning about – in the letter I received from Standard Life it clearly states that they would like to, and I quote “…. to take this opportunity to reaffirm our commitment to intermediaries….” The only problem Standard Life, is that from where I’m sitting your actions speak so loudly I cant hear a word you say. As with Steve Burton, Marty Y and others, I’m very pleased I ceased using them years ago and suspect that many others did the same, so the effect will be minimal to my firm – but I feel very sorry for those who had stuck by Standard Life only to be treated like this. They wonder why so much money has moved away to wrap platforms – I can see a bit more leaving soon.

  11. Clients who receive no service from their IFA will be better off, everyone else will just be moved away, so I can’t really what the problem is? The extra 0.3% that Standard Life get will probably be more than they lose in transfers, so it makes sense for them too.

  12. Breach of contract

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