View more on these topics

Unbundling tactics: Different platform approaches risk confusion

Skandia, Cofunds and Fidelity FundsNetwork are adopting a range of different approaches when it comes to unbundling their platform charges, risking client confusion and causing complexity for advisers.

Under FCA rules, from April platforms operating a bundled charging structure for existing business will have to switch to an unbundled platform fee where there is a ‘disturbance event’, such as a fund top-up or change to the product. Cash rebates and fund manager payments to platforms are banned on new business.

FundsNetwork and Cofunds have decided that where these trigger events occur, they will automatically switch clients into equivalent clean share classes.

The platforms have also ruled a trigger event on one fund holding will see that segment of the portfolio switch to an unbundled fee with the rest able to stay in a bundled fee structure.

But Skandia will still keep clients in rebate-paying share classes, with the rebate paid in units to the client account and the platform fee paid from the client cash account. The platform has also decided any disturbance event on a portfolio holding will see the entire client account switch to an unbundled platform fee. 

Skandia is considering an option to automatically switch clients in unwrapped platform accounts into clean funds, as rebates held outside of tax wrappers are subject to income tax.

Derbyshire Booth managing director Greg Heath says: “We are seeing these differences causing clients problems now. They get different information from different platforms and call us because they are bamboozled. It is information overload.”

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    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

    Email: customerservices@moneymarketing.com