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Threesixty calls on Skandia and FundsNetwork to confirm platform trail stance

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Threesixty Services is calling on Skandia and Fidelity Funds Network to confirm they will stop paying trail commission to advisers when the FCA’s platform legacy rules are implemented.

In last month’s platform policy statement, the FCA said from April 2016 all legacy payments between fund managers and platforms will be banned but it does not prohibit trail payments to advisers.

As fund supermarkets, both Skandia and FundsNetwork have large legacy books with significant trail being paid to advisers on past business.

Threesixty Services managing director Phil Young says this should stop from 2016 in order to promote transparency around charging.

He says: “The payment of trail after 2016 goes against the spirit of the platform policy statement. Advisers should prepare for the end of trail from 2016 regardless of the uncertainty.”

Fidelity head of business development Ed Dymott says: “Over the next few years most advised assets will migrate to adviser charging. But there is nothing in the FCA statement that goes beyond the RDR legacy commission rules to stop trail commission to advisers via platforms.”

A Skandia spokesman says: “Given the three years before the ban on retained rebates is introduced, it is likely  most clients will be transitioned into an adviser charging model well ahead of deadline. We are looking at alternative options for our bundled book of business dependent on likely demand from advisers.”

Cofunds has confirmed it will move all clients into clean share classes.

Director of marketing Verona Smith says: “Our intention is to act in the spirit of the RDR and move to a clean share class world without rebates. We think this is in the best interests of the customer and transparency.”

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Comments

There are 11 comments at the moment, we would love to hear your opinion too.

  1. Not quite correct. I asked for confirmation that they won’t be paying trail post 2016 due to latest rules, not requesting that they stop it. It’s a genuine problem for firms that this income will most likely stop and important to plan well ahead.

  2. Simon Kershaw 16th May 2013 at 9:40 am

    @Phil

    I would suggest that MM be asked to correct the slant on this story. As it stands it throws another unlooked for angle shot at a subject already dangerously close to the hearts of small IFAs.

  3. John Blackmore 16th May 2013 at 9:52 am

    Moving to a clean share class is not a problem but Cofunds will presumably continue to pass on the trail ?

    The FCA have confirmed that there is no Regulatory reason for trail commission to stop and that platforms will be allowed to pass trail on. So why would Cofunds want to arbitrarily change existing contracts ? why force advisers to re-negotiate existing contracts ? trail will die a natural death over time. No need to force the issue.

  4. Incompetent Regulators Award Team 16th May 2013 at 9:56 am

    I think it would be appropriate to stop all FCA staff salaries and bonuses after 2016 until they all have the necessary qualifications to do their job!

    Once they qualify reduce their salaries to 50% of current figures with no bonuses and pensions.

  5. As Phil Young says firms just need to know well in advance SK they can plan. In addition the FOS news to take note if trail is turned off’, they need to respect Time bars and long stop as this is a change of contract terms for firms who will be having ongoing fee paying clients subsidising storage of files for thksewhise trail is turned off.

  6. Oh yes for those who don’t know, the FSCS Do take in to account time bars and long stops unlike FOS.

    FSCS have to abide by long stop and cannot pay out even if they want to.

  7. To anonymous @ 9.52 Cofunds have confirmed trail will go along with move to clean share classes. Not everyone is picking up on this hence the need to get clarity.

  8. Chris Macdonald 16th May 2013 at 10:17 am

    Anonymous

    Where exactly will Cofunds be getting the trail from on a clean shareclass?

  9. John Blackmore 17th May 2013 at 7:17 am

    If Cofunds have confirmed that trail will go then perhaps they should write to advisers to explain why they feel they have the right to destroy an existing contract. Telephone calls to Cofunds have so far confirmed that they do NOT intend to force clients to switch to clean share classes. If this nis not the case then they should say so clearly and allow the issue to be settled in the courts

  10. @anonymous 7.17 they might not force move to clean now but confirmed this will be the case from 2016 onwards, hence end of trail commission. It’s a very important issue to get clarity on, but a product of the latest FCA paper so likely wouldn’t breach contract.

  11. I think a deeper analysis of the effects of the new published rules is needed here.

    Where an IFA uses a platform the commission is paid to, and owned by, the platform not the adviser. The platform then pays part of its commission to the adviser. The new rules prevent the platform receiving the commission post 2016 so after that there would be nothing to pass on.

    Of course, an IFA who has dealt with the fund company can continue to receive trail commission because it is paid direct.

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