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Skandia launches unbundled platform proposition

by William Robins on Dec 18, 2012 at 10:02

Skandia launches unbundled platform proposition

Skandia has launched its unbundled platform proposition, which will facilitate adviser charging and pass on rebates as units. 

The Old Mutual-owned provider said the proposition met the Financial Services Authority's planned platform rules, set to come into force at the end of next year. The regulator is set to ban platform cash rebates and the provider payments to platforms.

New customers will automtically be placed onto the unbundled pricing structure. Existing customers can choose whether or not to move across to the new proposition, and all requests can be executed online by an adviser.

Peter Mann (pictued), managing director Skandia UK, said: ‘Today is a significant day for Skandia. The deployment of the new proposition has been the subject of careful planning, and puts clear blue water between us and some of our competitors. A deployment of this size will understandably take time to bed down, and our focus now is on helping advisers through this transition phase.'

59 comments so far. Why not have your say?

Johnny Evans via mobile

Dec 18, 2012 at 10:30

'puts clear blue water between us and some of our competitors'. I agree - many of your competitors are way ahead.

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Tom

Dec 18, 2012 at 10:36

Spot on Johnny.

Skandia launch their RDR ready platform, but from what I can gather the absolute key to their pricing is the ability to get rebates. And guesss what? These won't be available until 31st December. OK, so I appreciate its only a few days away, but given its importance to their proposition, you'd think they'd get this right from day one.

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Anitaki

Dec 18, 2012 at 10:38

@ Johnny

Agreed

The other ships have sailed and Skandia is still in port

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Simon P via mobile

Dec 18, 2012 at 10:39

'Existing customers can choose whether or not to move across to the new proposition'. Really??? So if I top up a clients wrapper or switch funds they can choose to stay on the old structure? I don't think you are offering this at all.

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Harriet Marlow

Dec 18, 2012 at 10:42

"Deployment" "New Proposition" "Clear blue water" "Bed down" "Transition phase"

BINGO!

Now all I need is "thought showers", base-touching and some "blue sky thinking" and I've checked off my bull**** bingo chart for the day.

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Sam Gee

Dec 18, 2012 at 10:56

@Harriet - best comment of the day award!!

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EURYN OWEN

Dec 18, 2012 at 10:58

B!!!!hit bingo. Nice one!

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Harriet Marlow

Dec 18, 2012 at 11:08

Thanks for the empowerment (1 pt) my fellow innovators (2pts). Great to know we're on the same page, not a sticky wicket, or under a waterfall of cascading turnkey issues (7pts).

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You must be joking

Dec 18, 2012 at 11:19

Whilst the Bingo comments are mildly amusing a couple of other comments here are incorrect:

@ Tom - if (instead of posting comments on here) you ran a couple of illustration you'd see the exact rebate for each chosen fund used in the illustration.

@ Simon P - a client can stay on the bundled charging structure (with the £68.50 fee) despite carrying out a top-up and switches - this does however cause a move to adviser charging in the case of ISAs and CIAs, but this is, of course, an FSA requirement and not a Skandia one.

There's nothing worse than mis-information!

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Darren Lloyd Thomas

Dec 18, 2012 at 11:27

Well said YMBJ. I am a bit fed up with the Skandia witch hunt to be honest. They aren't right for everyone in every situation - but there is also daylight snobbery apparent from those who have gleefully let their clients pay exorbitant prices for the same funds under the guise of 'financial planning'.

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John Burchett

Dec 18, 2012 at 11:41

Skandia have gone a long way to providing advisers with options, which is more than can be said for the others in the same market.

Some of the comments made appear to be rather ill informed and lack any real value in a debate.

Keep it factual

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Tom

Dec 18, 2012 at 12:05

YMBJ- sorry, I haven't had need to do an illustration yet. I simply looked at the fund list document available through the SIS site which clearly explained rebates would be published on the 31st December.

No mis information at all. If as you say this information is available on an illustration, why not just publish it in the fund list?

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Mark Angus

Dec 18, 2012 at 12:06

Harriet

Quality.

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Sam Matthews

Dec 18, 2012 at 12:16

YMBJ - the FSA dont require a wrapper to move to adviser charging just because new monies are added - pre RDR funds can continue to pay trail and new monies must not pay any commisson. You are correct though that there is nothing worse than mis-information

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You must be joking

Dec 18, 2012 at 12:17

@ Tom

Whilst Skandia have an obligation (FSA) to provide illustrations on the correct charging basis - hence rebates being available for illustration purposes - they also have confidentiality agreements with some fund groups (hence the 1st January date for fund list)

I've picked a couple of 'popular funds', TERs, rebates and NET TERs are as follows:

Threadneedle European Select: 1.69% - 0.82% = 0.86%

First State Asia Pacific: 1.55% - 0.65% = 0.90%

M&G Global Basics: 1.67% - 0.78% = 0.88%

M&G Strategic Corp Bond: 1.16% - 0.54% = 0.62%

BlackRock N Am Eq Tracker: 0.22% - 0.10% = 0.12%

Invesco Monthly Income Plus: 1.44% - 0.69% = 0.75%

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EURYN OWEN

Dec 18, 2012 at 12:21

As a regular Skandia user and as someone who will use them in the future I am not involved in any witchunt against them. It was just that the term used by Harriet to describe the "David Brent management speak" was really funny.

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You must be joking

Dec 18, 2012 at 12:22

@ Sam

If you provide advice, whether to hold, add to or sell a collective, post 1st January 2013 then that collective comes under adviser charging.

PS12/03 deals with this

YMBJ

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Sam Matthews

Dec 18, 2012 at 12:27

YMBJ - no NEW commsion can be paid - if you switch ie sell a collective and buy a new one then commision cannot be paid on the new one. Any 'untouched' collectives can continue to pay trail commission.Likewise if new monies are added that buy new collectives then these cannot pay trail but any pre RDR collectives can continue to pay trail.

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Dave Anderson via mobile

Dec 18, 2012 at 12:33

Spot on Sam. Skandia are treating any 'disturbance' as meaning the whole wrapper moves to AC - the rules don't state this. YMBJ - time to read the PS again!

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Simon P via mobile

Dec 18, 2012 at 12:34

@ Sam - you are absolutely correct - YNBA - you are absolutely wrong

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Simon P via mobile

Dec 18, 2012 at 12:41

*YMBJ

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Harriet Marlow

Dec 18, 2012 at 12:45

Apologies for derailing your discussion YMBJ - am following with interest as my background is Wraps (with unbundled charging only) and so I am closely following the transitions being made by Skandia et al.

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l'ifa passeport en provenance de France

Dec 18, 2012 at 12:54

I am a bit fed up with the Skandia and secret kick backs eh Darren ?

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Jon Targett

Dec 18, 2012 at 14:00

Harriett if I give you

'Journey ' and 'window of opportunity' do these count toward bonus bingo points ??!

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Harriet Marlow

Dec 18, 2012 at 15:14

Jon, those are especially A-Game answers, rest assured that you have synergised yourself to the top of the leaderboard.

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Green Eyed Monster

Dec 18, 2012 at 15:20

Harriet,

How about "Going Forward" ?

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Sascha K

Dec 18, 2012 at 16:09

"No mis information at all. If as you say this information is available on an illustration, why not just publish it in the fund list?"

They did.

http://www2.skandia.co.uk/Documents/Literature%20Library/SIS/CIA/PDF8730_Funds_List_Charge_Basis_3.pdf

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Jon Targett

Dec 18, 2012 at 16:22

Thanks Harriet

very pleased with that result I was definitely 'in it to win it' :-) !

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Anitaki

Dec 18, 2012 at 17:01

Have now all you now got the "target outcome" you have 'programmed for'??

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Sam Matthews

Dec 18, 2012 at 17:08

Skandia have put the flag up the pole and are waiting to see who salutes

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Harriet Marlow

Dec 18, 2012 at 17:12

Sam, Anitaki, Jon, Euryn and Green Eyed Monster - I think "you are ALL winners"

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Bob Donaldson

Dec 18, 2012 at 17:18

Its the other issues with Skandia that are creating problems, as far as I am concerned they are way behind the game on many issues. We wait to see if they are even left standing in the New Year and I wouldnt count on it unless they go direct to consumer.

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Bob Donaldson

Dec 18, 2012 at 17:19

Oh 2 bingo points for 'behind the game'

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Sally Thomas via mobile

Dec 18, 2012 at 17:39

'Skandia launches unbundled platform proposition' something many of their rivals did a long time ago. This drivel about being ready for the rebate ban is far too premature. The fsa won't issue final rules till Q1 which means the ban probably won't take effect till end Q1 2014 giving all the other platforms ample time to build capability to deal with unit rebates. In the meantime it is just irrelevant (and just means that skandia clients will have to continue to sell units to pay adviser charges creating potential CGT liabilities as they don't have a cash account)

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Bob Donaldson

Dec 18, 2012 at 17:50

@Sally - Agreed and have you ever tried to track those sales, a little bit taken from each fund held. An absolute nightmare and one of the hardest ways of running such a feature.

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You must be joking

Dec 18, 2012 at 18:43

@ Sam, Simon and Dave

I'd suggest that the first thing you do on Wednesday is read Annex B of http://media.fsahandbook.info/Legislation/2012/2012_9.pdf (it's on page 6)

This details, quite clearly, what is and isn't considered investment advice post RDR.

Whilst one of you (can't be bother looking at which one) rightly states that taking out a new investment is advice, you should ALL also note that advising a client to SELL an investment or NOT SELL an investment is also an advice point whch in turn triggers an end to commission. (There are lots of others there too worth noting!)

So, if you have a client with an ISA (or portfolio of collectives), holding, say, funds A B C and D and you review their investments and recommend that they sell half of holding B and all of holding C and use the proceeds to buy fund E the situation is as follows:

You have advised them to NOT SELL holding A - end of trail

You have advised them to NOT SELL part of B - end of trail of retained part

You have advised them to SELL holding C - no further holding

You have advised them to NOT SELL holding D - end of trail

You have advised them to BUY holding E - no trail

Or are you going to try and argue with the FSA that you only reviewed half of the fund B holding and the fund C holding, and thus should should be able to cling onto the commission you get from holdings A and D and half of B as you didn't provide any advice on these???

Good luck with that!

YMBJ

Note: The above doesn't apply to 'life policies'

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Simon P via mobile

Dec 18, 2012 at 19:32

YMBJ - you are good at reading rules - not so good at applying them in the real world. Giving advice is key here. If I advise a client to add another 10k to a wrapper and invest in XYZ fund and don't give any advice on the existing funds they they can continue to pay commission - skandia will stop all commission. If I advise to switch out of fund A into fund Z but don't advise on funds B,C and D then those can continue to pay trail - skandia will turn off trail on all funds in the wrapper. You are right that in most situations you will advise on all funds but that isn't necessarily the case all the time (especially if its just a top up) and the rules are very clear that trail only ceases if advice us given. This discussion is about how skandia are applying the rules not about advisers justifying their actions to the fsa.

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Sally Thomas via mobile

Dec 18, 2012 at 19:38

@Sam - I agree.

@ Bob - yes I have and it is indeed a nightmare. Laughably skandia promote not having a cash account as a good thing. Hmmm potential cgt liabilities and horribly complicated transaction histories. Give me a cash account and cash rebates any day. Most platforms offer auto disinvestment anyway so you get the best if both worlds.

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EVHE

Dec 18, 2012 at 20:04

http://www.citywire.co.uk/new-model-adviser/skandia-introduces-unbundled-charging/a379072

The article in January 2010 implied that the Skandia solution would offer cash accounts, ETFs and Investment Trusts to improve investment capability. Three years on there does not seem to have been a great deal of development other than development driven by regulation.

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CardiffJock via mobile

Dec 18, 2012 at 22:26

@Simon P (your last comment to YMBJ) Unless you take the simple step of moving them over to fees at the same time? Easy, no?

i don't get it - What's the obsession about the fear of turning off legacy trail commission? Sounds like you're one of many advisers I've spoken to who haven't had the full and frank RDR & fee discussion with their clients, so keen are they to retain trail commission - "do not disturb!!".

I have many clients (but by no means all of them) on Skandia and I've spent time over the last few months explaining that we want to turn off commission and start fees from Jan 2013. It's been cathartic and rewarding and no one said 'no'. Skandia helpfully provided forms well in advance to allow us time to get all clients informed, up to speed, and signed up to convert to adviser charging. We're charging the same but if there's a sudden event we need to react to then we can without worrying about income as recurring fees will continue.

So, I don't give a monkey's about commission or the fact that partial top-ups or fund switches etc turning it off. And nor should anyone if they're genuinely offering an impartial review of a client's portfolio.

What's worrying is that Skandia say that from forms they have so far received, only 8% of clients will be switched to adviser charging at the end of the year. I think either there a lot of heads in sand or (hopefully?) lots of late adopters.....

@ Sally - Skandia have a good CGT calculator which does it all for you. Accountants that I've given the output to are fans.

Nadolig Llawen

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Simon P via mobile

Dec 18, 2012 at 22:58

@cardiff jock. My business is all fees I don't have any commission - my comments were merely based on the rules and how skandia apply them not any personal concern over losing trail. I think the earlier point someone made on cgt wasn't about having a tool to calculate it - just that you may create a liability for the client - whereas with cash rebates the rebate can be used to fund any charges hence not needing to encash units like you do with skandia.

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EURYN OWEN

Dec 19, 2012 at 08:00

@Cardiff Jock - I agree with your comments (Nadolig Llawen i ti hefyd!)

I've read all these comments about what happens with fund A,B, C etc with confusion. If you've given advice on these funds then you are (or have) met/discussed with your client their investments and the easiest thing to do at this point is to introduce the adviser charge form to convert from commission to adviser charging. Your not asking your client for a penny more its just that its called something different. If your clients are not aware that you get paid a percentage of their investments then get ready for the discussion.

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Stanley Kirk

Dec 19, 2012 at 09:35

Interesting - instead of 'cash rebate', Skandia have 'reimbursed rebate' of pretty much the same amount. How is this any different in marketing terms (big difference operationally - much more expensive and complicated than cash). The FSA want to ban cash rebates (final decision still under cogitation) because nasty advisers might highlight the rebate to distract from their fees. How is this actually different?

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You must be joking

Dec 19, 2012 at 09:35

@ Simon P

I can just see it now, FSA bloke(ss) sat across desk from an IFA still receiving trail on some funds having advised on new investments:

FSA bloke(ss): so, you advised Mr Smith to invest £10k into XYZ Fund?

IFA: Yes

FSA bloke(ss): what advice did you give regarding his existing holdings?

IFA: None, this was a pure new investment

FSA bloke(ss): so you didn't consider whether the new investment was aoppropriate alongside the existing holdings?

IFA: *silence*, yes

FSA bloke(ss): so you advised him to retain his existing holdings?

IFA: *silence*, well no I just didn't mention them

FSA bloke(ss): so you considred the appropriateness alongside the existing funds, but thought it best not to mention this?

IFA *silence*: well, you see...

That's the real world Simon

YMBJ

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Tom

Dec 19, 2012 at 09:53

@Sascha K- They added the rebates during the day to the document. When I looked first thing in the morning it clearly said on the document that rebate information would be available on 31/12. Must have been reading htis blog!

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Fred Jackson via mobile

Dec 19, 2012 at 10:35

I'm not an adviser but not sure I understand YMBJ. Client has 10k to invest. Adviser recommends topping up ISA. Risk profile hasn't changed so recommend investing as per current investment strategy. Not sure why an adviser would be obligated to also specifically advise NOT to sell the existing investments. I agree advisers should be looking to move clients from trail to fee's as a matter if course if they want to survive in the new world but this is a separate point.

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Sally Hamilton via mobile

Dec 20, 2012 at 07:57

Forgive me because I don't use Skandia having moved my clients into an adviser charging environment over a year ago to another platform, but.... If Skandia are debating in the form of units, doesn't this then become a transaction history nightmare? I buy a fund lets say with 1% AMC, which has a 0.25% rebate of units, that rebate then buys 1% AMC fund, that then pays a 0.25% rebate, which then buys a 1% AMC fund.....also YMBJ, you clearly work for Skandia by the way...possibly Graham Bentley perhaps? Let me pose this question....a client comes to me and says "I am happy with my current asset allocated portfolio and just want to add another £11280 into it, and I don't want to review my investments until my next review" which I document on file... This then disturbs the wrapper rather than at fund level...am I right?!

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You must be joking

Dec 20, 2012 at 10:04

@ Sally

I do not work (and have never worked) for Skandia - I do know Graham though and I don;t think he'd apprecioate people thinking I was him, or he was me!

I believe Skandia have gone down the rebate to units route as this appears to be the FSA's preferred choice.

Firstly, they (FSA) are paranoid that cash rebates will be used to mask charges and secondly, if you're buying investments why would you want rebates to be held in cash and not used to buy further units?

Regarding your question, from an FSA point of view I would think that this isn't advice, and this could be processed on a non advised basis (without commission of course) and without affecting existing holdings.

I'm not sure which providers would process it on that basis though.

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Simon P via mobile

Dec 20, 2012 at 11:08

@ YMBJ 'I believe Skandia have gone down the rebate to units route as this appears to be the FSA's preferred choice' Err - no. Skandia operated like this as it was a commission based supermarket and they didn't build cash accounts for cash rebates as the supermarket model doesnt require them - proper wraps have had cash accounts to facilitate fee's for a long time. Skandias model was in place before the rebate ban was even talked about so please don't pretend they have taken an approach because of the direction of the FSA. The whole rebating ban is madness and will cost the industry millions for no real benefit. Please dont lecture us on cash rebates masking charges - transparency and skandia arent words that go together. I also suspect you work for Skandia

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You must be joking

Dec 20, 2012 at 11:15

Simon - good for you :-)

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l'ifa passeport en provenance de France

Dec 20, 2012 at 11:26

Simon

Smoke and mirrors eh ? ask a fund group what the likes of skandia, standard striff etc demand from them .... transparecy your having a laugh !!!!

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Bob Donaldson

Dec 20, 2012 at 11:35

While I am not a fan of the skandia platform (it has two many quirks such as no cash account, drawdown quotes can't be done on the platform advisor charging taken over all funds), at least they are making changes.

It is hard enough being an advisor at this time without being a provider. Skandia have obviously thrown millions at making the adjustments to their platform and still lost money over the last year. Perhaps the whole RDR can yet again be blamed in many ways as it seems to be escalating costs at a rate of knots.

We have gone from a scenario of clients happy with a 1.5% AMC to them now being charged an admin/flat rate fee and still 1.5% but then getting part of that fee rebated.

In addition we have fund managers that have been sitting pretty for a good many years racking it in, charging performance fees and now talking about higher fees for the more popular funds. Show me a poor fund manager!

Please would someone tell me where the client is better of in all this other than he is confused by it all.

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Graham Bentley

Dec 20, 2012 at 11:41

This is, in fact my first post here as I don't generally bother trying to respond to participants who seem to object to Skandia's mere existence. That is their belief and their opinions are freely expressed. I am naturally pleased market share stats demonstrate that there are many advisers who use Skandia extensively, who may not feel they need to expend energy posting positive comments, but "thank you" to those who spared the time.

However, in this case I felt I needed to confirm that I am not "You must be joking". I believe YMBJ is an adviser but since these posts are often anonymous I cannot confirm that.

Whatever one's beliefs about cash accounts, unit rebates etc, the fact is we are where we are so perhaps we can just get on with it? To paraphrase Dave Allen, "Goodbye and may your platform go with you".

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Simon P via mobile

Dec 20, 2012 at 11:51

Transparency is an easy nut to crack. Ban provider retained rebates and ensure any rebates to the client are fully disclosed - whether in units or cash. I know the FSA are concerned that clients see cash rebates as the 'advisers money' but this is easy to clarify without causing mass disruption and cost. Banning rebates altogether (ie just have clean share classes) is not the way forward either in my opinion as it is important that competition on fund prices to providers exists to give the client the best outcome

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Stanley Kirk

Dec 20, 2012 at 12:15

@ Simon P - I agree 100%. Graham Bentley thinks 'we are where we are' and that the cash rebate ban is a fait accompli - Skandia have certainly lobbied hard enough in favour - but wasn't that an FSA 'consultation' and haven't we yet to hear the (delayed) response? Given the overwhelming negative response from the rest of the platform industry, the FSA have very good reason to think again - particularly as, from Skandia's own marketing material, we now have proof there is no difference between cash and bonus unit rebates when it comes to 'promoting' the rebate. Skandia's obvious schadenfreunde that they have the life company experience of 'smoke and mirror' pricing from which bonus units derives, and most of the other major players don't, could yet prove to be ill-founded.

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You must be joking

Dec 20, 2012 at 13:12

@ Simon P

I also agree with the final part of your last post - amazing huh!

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Sunny Bob

Dec 21, 2012 at 15:28

In the run up to RDR Ive been mis-informed by various providers about the process required going forward - only Skandia gave correct information from the early days and as for some of the banks withdrawing their sales forces....

Have a Hairy Christmas and a Nappy New Year!

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EVHE

Dec 23, 2012 at 00:15

Sally good guess re ymbj....I think you have the first name correct with the surname similar to a buildings name.

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Graham Bentley via mobile

Dec 23, 2012 at 09:56

YMBJ is Not, I repeat NOT a Skandia employee, but an IFA. It is a little strange that some (generally anonymous) users of this commentary cannot believe Skandia might get a positive comment given it has more retail users than any other retail platform. And I'd also suggest industry users agreed or were compelled by Citywire not to hide behind anonymity.

Merry Christmas!

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