View more on these topics

Supermarkets make a meal of negotiations

IFA Chelsea Financial&#39s criticism of Cofunds and FundsNetwork last week showed how frustrated IFAs have become at the fund supermarkets&#39 apparent inability to come to a compromise on the funds appearing on their platforms.

After several months, the two rivals have admitted that they are still locked in talks over a deal which would see the funds of their parent companies become available on both platforms.

The news has dismayed IFAs because the fund managers involved – FundsNetwork parent Fidelity and Cofunds&#39 backers – M&G, Gartmore, Jupiter and Threadneedle -are all top UK players.

Hargreaves Lansdown investment manager Ben Yearsley says: “It does not help IFAs or investors when some of the biggest fund management groups are not on each other&#39s supermarkets. Cofunds and FundsNetwork make themselves out to be one-stop shops but, when such huge names are missing, how can they say that?” Yearsley believes the stalemate has harmed both supermarkets but has probably done more damage to Cofunds which, without Fidelity, is lacking the biggest-selling fund manager in the UK.

Cofunds also lacked the presence of another big name, New Star, for almost a year until the fund manager agreed separate deals with the platforms in April.

The question remains as to what deal Fidelity is trying to strike in exchange for allowing its funds to be made available on Cofunds.

Fidelity will not divulge the information but Chelsea managing director Darius McDermott believes the fund manager is insisting that all four of Cofunds&#39 parent companies sign up to FundsNetwork before it will reciprocate.

He says: “Cofunds is our choice of supermarket and we want to see Fidelity funds on there. Now that the exclusivity agreement has been removed, it should be each parent company&#39s individual business decision whether they join FundsNetwork but it seems that Fidelity is not allowing that to happen. We want it to be sorted out but I doubt whether all four have the same views on FundsNetwork. It is a stalemate.”

McDermott&#39s theory has been given weight both by the length of time that the supermarkets have been in negotiations and by their refusal to deny it.

Cofunds chief executive Clive Boothman will only say that signing Fidelity is unlikely unless there is a “basis for exchange” while Fidelity says it hopes the supermarkets can one day compete on something other than fund coverage. Neither seems confident of the dispute being resolved soon and not all of Cofunds&#39 backers seem keen to accept FundsNetwork&#39s business conditions.

Jupiter joint managing director Steve Glynn says: “We remain in conversation and many of the concerns we have had historically have been dissipated. But we still must overcome FundsNetwork&#39s terms, which are by far the most aggressive of any fund platform. Because of this,I do not see there being a short-term resolution.”

Jupiter is not believed to be alone in objecting to FundsNetwork&#39s conditions for joining but, despite McDermott&#39s theory, there seems a good chance that Fidelity may not necessarily insist on all four providers joining its platform. Some IFAs believe that Fidelity would accept only three – the only question being which provider FundsNetwork would be happy to do without.

Simpsons of Brighton partner Andrew Merricks says: “It is hard to pinpoint the weakest link. Gartmore&#39s funds are not that great and there may be some issues after its role in the split-cap saga. Jupiter still has doubts over its ownership and that may be a problem as well. Either way, if Fidelity accepts three providers, there could still be some problems to overcome. There are some big corporate egos at play here.”

There is little doubt that the two supermarkets&#39 progress, though swift, could be even more rapid if such long-running and complicated issues could be resolved quicker. But some IFAs believe that Cofunds and FundsNetwork are also being hamstrung by the arcane practices of many fund managers – ironically, the companies with most to gain through the success of the supermarkets.

Michael Philips proprietor Michael Both says: “Many fund managers allow in specie transfers to the supermarkets for their funds but do not allow it for Isas or Peps, meaning that investors have to sell and then rebuy. It not only alienates clients, who are already deterred from investing by the state of the markets, but also slows the progress of the fund supermarkets. It makes no sense. Fund managers should be overjoyed to rid themselves of the paperwork.”

With optimistic but pointedly tough language coming from Fidelity and the Cofunds&#39 backers, Both believes there will be no resolution in the foreseeable future as the camps scrap for minor – and not so minor – concessions.

But they should hurry. IFAs&#39 patience is wearing thin and neither supermarket is doing so well that it can afford to lose business. This is one saga that IFAs would like to end soon.


Berkeley Alexander has new approach to PMI

BERKELEY ALEXANDER hospitalCARE Type: Private medical insurance Minimum-maximum ages: 18-64 Maximum benefit: Section one – £5,000, section two – £10,000, section three – £5,000, section four – £5,000, section five – £1,500 Cover provided: Section one – Angioplasty, cartilage operation, dental work, ears, eyes, nose, throat, duodenal, peptic or gastric ulcers, gall bladder, hernias, haemorrhoids […]

&#39Line being drawn under dual-pricing complaints&#39

Halifax and Cheltenham & Gloucester say the Financial Ombudsman&#39s rejection of complaints about their dual-pricing policies shows the arbitrator is trying to draw a line in the sand for future complaints. Last week, the ombudsman threw out a case of a couple tied to C&G&#39s standard variable rate of 7.25 per cent who applied to […]

Standard sets up range of fixed loans

Standard Life Bank is launching a new range of fixed rate Freestyle mortgages with the first fixed until May 20, 2005 at 4.9 per cent on loans to value up to 90 per cent and 5.09 per cent on LTVs up to 95 per cent. The second is fixed until October 15, 2007 at 5.09 […]

Probe shows wide divide between MVRs on WP pensions

Life offices are hitting investors with widely differing market value reductions on with-profits pensions, with some running at 28 per cent while others have none at all, according to research by Money Marketing Online. The research found that Scottish Equitable tops the table for biggest MVRs, with up to 28 per cent, followed by Scottish […]

The future of active management is now

Fees under pressure. Regulatory moves against closet indexers. Rapid advances in financial technology. Shifting sentiment among investors. Such mounting challenges have led to widespread speculation about active management’s shrinking future. But a closer look inside intelligent portfolio construction today tells a story of expanding roles, added value, and innovative risk-adjusted, lower-cost solutions. Four investment experts […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm