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Skandia to pay trail until 2016; Won't enforce clean class transfers
by Jun Merrett on Sep 17, 2013 at 10:32
Platform Skandia has announced it will continue to pay trail commission to advisers until 2016 and not enforce bulk transfers to clean share classes.
In its April platform paper the Financial Conduct Authority (FCA) announced a ban on payments between fund groups and platforms from 2016. It is those payments that Skandia used to pass on as trail commission to advisers.
The platform said it would allow advisers to retain trail commission on its bundled book of business for ISA and collective investment account products until April 2016.
Skandia said half of its platform assets are now operating under adviser charging and it anticipated the volume of clients remaining in its bundled model in 2016 would be 'minimal'.
From April 2014, if an asset is disturbed, for example undergoes a switch or a top up, the trail commission will be cut.
Peter Mann (pictured), Skandia UK's managing director, said: 'Our decision is not to take precipitous action, the sheer motivation of this is letting the adviser and client have the decision and a genuine desire to deliver the most choice over the largest period. We've got 100% of our business from advisers so why not trust them to run their businesses in the right way by 2016?
'The confirmation of our position gives advisers certainty more than two years ahead of the April 2016 deadline set by the FCA. Our aim has always been to find the optimal solution for advisers and their clients in light of the regulatory landscape and I believe we have done that.
'We anticipate that a very small percentage of our ISA and CIA business will be left in our bundled charging structure by 2016. That date is over two years away and it has never been our intention to expedite the movement of that book to an unbundled model before advisers are ready to do so.'
The platform also confirmed that trail commission for pension and bond products can continue on undisturbed assets beyond 2016 because the Skandia Collective Investment bond and the Collective Retirement Account are administered by life company Skandia Multifunds Assurance and is out of the platform rules' scope.
AXA Elevate pitched into the debate earlier in the week stating it would not make bulk transfers arguing funds with cash rebates can sometimes be cheaper than their clean counterparts.
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