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Barclays plans admin fee for fund groups in alternative RDR move
by Danielle Levy on Oct 19, 2012 at 07:47
Barclays is aiming to use its distribution to preserve its margin in the post-retail distribution review (RDR) world by charging administration fees to the product providers whose funds it selects for client portfolios.
Barclays’ wealth and investment division is considering introducing administration fees for product providers across its advisory, discretionary and execution-only channels, arguing fund groups should bear the costs of administering portfolios rather than clients.
It is understood the fee will come out of the 75 basis points which fund groups typically charge on new RDR-ready share classes.
While the firm was keen to stress the move was not linked to product recommendations, it would see Barclays using its distribution to protect its margin post-RDR.
The incoming regulation will see the removal of trail commission for new holdings in funds, although firms can continue to take trail or rebate commission to clients on legacy positions.
The greater transparency the regulation will bring in next year could cause elements of the value chain to come under pricing pressure.
A spokesperson for the bank explained: ‘As an existing industry standard for platforms, this proposed administrative fee relates to services supplied to the product provider and not for any product recommendations.
'Our approach follows the spirit of the RDR which is around clarity of services and charges for those services. We have notified the appropriate channels and will continue to keep our clients fully informed of all relevant changes ahead of RDR.’
The Financial Services Authority (FSA) said it was unable to comment on individual firms and could not confirm whether the alternative charging model, which includes an administration fee for providers, is something regulators are looking at.
However a spokesperson said much would depend on the type of service being provided by the wealth management firm.
‘In the case of a wealth manager it really depends on what they are doing. If you are giving advice or a personal recommendation, you are caught by adviser charging rules. If you have some element where you would fall under the definition of a platform service provider, you would fall under the proposed rules there. If you are not under either category you still have to comply with the rules on inducements,’ the FSA said.
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