US giant Franklin Templeton is to stop offering Isas and Peps due to rocketing third-party business in a move it believes will spark a host of further withdrawals.
Franklin says its decision has been prompted by the burgeoning amount of business from life companies, fund supermarkets and wrappers.
It is negotiating with Fidelity's supermarket FundsNetwork over a possible deal to allow investors with Templeton tax-free wrappers to transfer to the platform.
The move comes as Templeton spearheads a major push into the UK retail market with the launch of four funds currently domiciled in Dublin. The funds – its mutual shares, Europe, US equity and UK corporate bond funds – will be brought into its existing UK-based Oeic while the Dublin unit trust platform will close.
Sales & marketing director Jamie Hammond says Templeton's decision to stop being an Isa and Pep manager coincides with its attack on the UK retail market in which it punches below its weight. But he believes rival fund managers will follow suit as third-party distributors increase their grip.
He says: “We are increasingly getting business from third parties and feel it is time to stop offering Isa and Peps. The big IFAs are being very supportive and I think other groups will follow suit.”
BestInvest business development manager Justin Modray says: “It is a pragmatic move. Supermarkets will grow in terms of market share and groups can pass on the admin burden to them. It will become more common over the next year or so.”