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Witan to switch off all trail commission

Witan Investment Services has notified advisers it will cease paying trail and initial commission for all business written prior to the RDR.

In a letter sent to advisers this week, seen by Money Marketing, WIS managing director Graham Hunnisett says the firm is making changes to the Witan Wisdom terms and conditions, which affect Isas and share plan accounts.

The letter says: “With effect from 31 December 2012, WIS will stop the payment of all trail and initial commission to financial advisers. This includes the payment of trail commission on business placed before 31 December 2012.”

Hunnisett says where a client was previously charged 1.25 per cent plus VAT for the Witan Wisdom Isa, the charge will reduce to 0.75 per cent plus VAT with effect from 31 December.

He adds any commission owed to advisers for the period up to 31 December will be paid in the first quarter of 2013.

Hunnisett says Witan has written to clients to inform them of the change.

A spokesman says the move will affect around 150 advisers and the trail being switched off amounts to “a few thousand pounds a year”.

Speaking to Money Marketing, Hunnisett says: “We very much welcome the RDR’s new level playing field which, by removing product-provider incentives, ensures that open-ended funds and investment companies are able to compete for investors’, and their advisers’, attention on their own merits.

“We have a small number of ISA accounts set up under the old rules which allowed payments to intermediaries, which will no longer pay such commission after January 2013, in order that all accounts are set up on the same basis in the future.”

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Comments

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

  1. OK hands up who will be next.The start of a trend!.

  2. What’s the real reason behind this move? Imagine where we’d be if all investment firms decided to switch off trail as a matter of course.

  3. Hiding behind RDR – scandalous.

  4. who are Witan ?

  5. It would be interesing to know how these clients are going to get ongoing reviews and advice if the payments are withdrawn.
    Dick Turpin is alive and well it appears.

  6. In terms of clarity and the removal of any potential conflicts of interest, this is a positive move by Witan. I wonder if the fund management industry is about to take a decision that the FSA never had the stomach for?

    By allowing trail commission for all pre RDR investment business, the FSA knew they were allowing a distortion of the playing field. There is the potential for clients whose investments are paying trail commission to receive no ongoing advice, so that the commission continues to accrue.

    It’ll be an unpopular move among advisers, but only about 150 of them. It should however serve as a warning bell to all advisers to look at all investments where they receive ongoing trail commission and plan for the worst!

  7. ken170647 youtube 4th October 2012 at 3:27 pm

    If Witan get away with this then the rest will follow. It will simply speed up the process of the total collapse of the IFA. Pity those advisers who sacrificed initial commission for trail.

  8. Will the last one out, lock the door

  9. I have used Witan for many years, particularly via their Jump product for children. Most have small values – between £500 and £2000 so Witan’s (less well-publicised) decision to apply a fixed account fee of £15 per half year will make their product exceptionally unattractive when viewed on a cost basis because an AMC of 6% (£30 on a £500 investment) won’t do a lot for their clients.

  10. this could well be the start of a number of providers deciding this is a good move. It will simplify their charging structures and put the onus on IFAs and financial planners to ensure that they have proper fee agreements in place with their clients. It could be a positive move if the wider fund industry adopts a similiar stance, if not it could be Witan seriously harming their distribution channel – funnily enough the next 11 weeks will very interesting! Perhaps Witan do not have IFA support as a key element of their bsuiness plan going forward?

  11. Dennis – please . Are Witan going to reduce their ongoing charges ? How will not paying mean that clients get advice without double paying ? Does no one feel they have to honor agreements ? Perhaps their TOBs were cleverly written so as to allow this company to cease future payments.

    If this is the future under RDR then god help the public. Honesty, Integrity and Trust will have no meaning in this hypocritical new world.

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