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Standard Life to bulk switch all investments into clean share classes in November

Standard Life head of platform propositions David Tiller

Standard Life plans to undertake an “unprecedented” bulk conversion of all investments in bundled share classes to their unbundled clean equivalent in November.

In March, HMRC announced that platform rebates would be subject to tax, forcing both Standard and Skandia to consider changes to their business models.

In April, the FCA confirmed all legacy payments on past business between fund managers and platforms are to be banned by April 2016. This means all platforms will be required to move to a clean share class model by this date.

In May, Standard agreed to pay all its customers’ platform rebate tax liabilities for 2013 after admitting it was surprised by HMRC’s decision to tax platform rebates.

Standard Life head of platform propositions David Tiller says the provider will convert all investments to clean share classes in November after HMRC refused to allow it to continue paying the income tax liability on behalf of clients beyond 2013.

He says: “We have decided to do a bulk conversion of all the funds on our platform. That is no little task and an unprecedented piece of work.

“We have agreed to pay the tax on rebates on behalf of our customers for this year and we agreed that with HMRC.

“We were not able to agree that beyond this year, so if we continue with rebates beyond this year they are going to be taxed. Clearly that is detrimental to customers, so by doing a big conversion we are able to avoid that tax bill for customers.”

Tiller says if the provider had decided to “drip feed” the changes it would have caused problems for advisers.

He says: “If it is done as a drip feed to clean share classes, rather than all in one go, there is a scenario where one client is in a bundled share class with a tax bill and another who is in a clean share class. It is quite difficult to justify providing an ongoing service for both clients and we did not want to put advisers in that position.

“I find it quite difficult personally to see a place for legacy on a platform. How can you have one customer on one set of terms and another customer on another set of terms if you are supposed to be providing ongoing advice?”


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There are 2 comments at the moment, we would love to hear your opinion too.

  1. What are you going to do for those unbundled share classes than are more expensive than bundled Mr Tiller? Are you going to proceed anyway at the potential detriment of the client? Are you going to get permission from the plan holder/adviser?

  2. @anon 2.56pm
    Really good question. I suppose though there won’t be too much of a difference between the overall cost of clean and rebated where the rebate is going back to the client.
    You also have to consider the effect of the tax liability on rebated share class and factor that into the cost of the investment.

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