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Transact cuts charges ahead of float

Transact is reducing its platform charges and taking steps to prepare the business for a full stockmarket listing.

In a statement to investors, chief executive Ian Taylor and chairman Mike Howard say the wrap firm will “share scale econ-omies with our advisers’ clients”. Head of marketing Malcolm Murray confirmed this will include a reduction in costs. He says: “Where we can make economies of scale because of the size of the case or for other reasons, then we will share those savings by reducing costs.”

Although the investor letter describes competitors’ charging models as “suicidal”, Murray insists that any reduction in price will not affect Transact’s service standards.

He says: “In order to safeguard our service, we need to keep our margin at around 20bps. It costs us 40bps to run Transact and at the momentour income is about 60bps so we have a 20bps margin and that is our profit. We will never endanger the service ideal that we have.”

Thomas and Thomas Financial Services managing director Darren Thomas says: “Bringing down their costs does two things. First, it makes
them more accessible and, second, it puts further pressure on the main- stream platform providers to reduce their own bundled charging structures.”

Taylor and Howard’s letter says that although now is not the right time to list, the company needs to be float-ready.

The letter adds that, as a result, they “will be seeking the right candidates to add to the board to meet the governance requirements of a listing”.

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