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Lukewarm response to FundsNetwork/Cofunds' TEX as value is questioned

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Lukewarm response to FundsNetwork/Cofunds' TEX as value is questioned

Fidelity FundsNetwork and CoFunds are urging their fund manager clients to pay to join the Tax Incentivised Savings Association Exchange (TEX), in a move which has been met with a mixed reaction from the industry.

TEX, which is backed by industry body Tax Incentivised Savings Association Exchange(Tisa) and the major platforms, has been developed over the past three years as a way to standardise the re-registration process ahead of the retail distribution review (RDR) platform rules, which have placed a particular emphasis on the issue.

The organisation is charging groups £12,500 to join alongside a £2,000 ongoing administration fee. Ed Dymott (pictured) of Fidelity FundsNetwork said it was encouraging its fund management clients, which total over 100, to join in order to bring uniformity across the industry and long-term cost savings.

He said: ‘We do feel there is a benefit for them, and going outside of this there are significant overheads from a legal point of view. If we do find fund managers that have an objection we will clearly find ways around that, but our preference is for fund managers to join.’

Cofunds is also urging fund groups that use its platform to sign up to TEX. Stephen Mohan, Cofunds' managing director or operational services and chairman of TEX, explained: 'TEX means you sign one contract and everyone signs one contract, and you get the right legal requirements to make sure you have the indemnities and service levels that work for the process.'

Like FundsNetwork, CoFunds is not making it an obligation for its fund manager clients to join, but Mohan says the cost-benefits of joining should be clear, as the legal costs of signing contracts with individual platforms and then having to update them will prove more costly over the longer term.

'This way is certainly a cost-effective way for people to offset the counter-party risks associated with re-registration and maintain indemnity and service levels in a way they can feel confident that they are meeting TCF needs,' he added,

One managing director of a boutique does not welcome the move, however, questioning the value in joining when the firm’s administrator is able to complete re-registration within five days.He also questions whether it is fair that fund management groups bear the costs of developing TEX.

Another distribution head of a large fund management group has welcomed the standardisation of the re-registration process. He takes issue with the fact it was predominantly developed by platforms but views it as a recognition of the growing importance of platforms and distributors in the post-RDR value chain.

‘Hardly any asset manager is going to say they are not going to work with Fidelity FundsNetwork or Cofunds,’ he added. 

Meanwhile, Kames' head of sales Steve Kenny welcomes the initiative. ‘Groups agreeing to provide infromation in a specific format to enable re-registration in a speedy and efficient manner is a good idea for groups, platforms and the end-consumer.’

Members so far include Allianz Global Investors, BlackRock, Schroders, M&G and L&G, while Henderson and Kames are also in the process of joining.Cazenove, meanwhile, said it was considering joining but also exploring other options.

Platform members include AXA Wealth, BNY Mellon, IFDS, Cofunds, FundsNetwork and Skandia.

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