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Zurich starts unbundling Sterling legacy book

Zurich has begun a bulk conversion process which will see it shift its legacy book of rebate-paying funds on the Sterling platform into clean funds. 

The first funds will be converted this week, with further tranches beginning in July.

All assets will switch to a 0.75 per cent Sterling platform charge, broadly consistent with the rebate retained by the platform on bundled business.

The Sterling platform is closed to new business. In July 2012 the firm announced plans to restructure its UK Life business with the separation of its legacy arm, named ‘In force’, from its retail platform and pension and investments proposition.

Data on the conversions, published on the Zurich website, show a number of fund holdings will see the combined cost of platform charge and investment charge increase under the clean funds by 0.25 per cent. But for most Sterling investors the cost will be equal or cheaper.

FCA guidance on conversion to clean share classes states that clients should not be disadvantaged by a switch to unbundled funds.

Zurich says all clients and their advisers have been briefed and clients with higher costs have the option to move to an alternative investment.

It adds adviser trail on the investments is paid from Sterling’s profits, meaning the switch will not affect trail arrangements. 

A spokesman for Zurich says: “The key reason for the approach taken was the FCA instruction not to leave people in existing structures right up until the end of the sunset clause [in April 2016].”


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