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Standard Life platform to go 'fully clean' by November
by Danielle Levy on Aug 09, 2013 at 15:22
Standard Life has set a November deadline to become one of the first platforms to only offer fully clean share classes.
The platform is planning to carry out the bulk conversion of all holdings in bundled share classes to their unbundled clean equivalent – including the available ‘super-clean’ share classes or discounted share classes.
This means that by the end of 2013 Standard Life will no longer offer the bundled retail share classes to new or existing customers on the platform except to facilitate re-registration. Prior to this there were 2,000 retail or unbundled share classes on the platform.
The move follows the publication of the FCA's Platform Paper earlier in the year in which it banned cash rebates from fund groups to platforms. The rules will come into force on 6 April 2014, but the FCA said platforms will have two years to move existing customers to the new explicit charging model. At the end of the two year transitional period, up to 6 April 2016, platforms will have to charge customers a platform charge for both new and existing business.
Standard Life said it had opted to go fully clean in 2013 to eliminate the income tax liability on rebates from bundled mutual funds and lower the costs of tax reporting. HMRC's decision to tax rebates earlier in the year marks a significant increase in the cost to investing for most advisers’ clients between 0.15% and 0.40% on a typical bundled share class.The company also highlighted the FCA’s desire for transparency and said that having different clients in different share classes was difficult to justify as part of an ongoing advice proposition.
David Tiller (pictured), Standard Life's head of platform propositions, said: 'We are making a clean break by converting all funds on our platforms in bulk to unbundled share classes. We’re doing this ahead of the FCA deadline, as we did with RDR, so advisers can focus on adding value for clients rather than asking them to manage the tax liability, deal with platform legacy issues or coordinate a drip feed conversion process over the next 2 years.'Given the tax liability on rebates will increase the cost of investing in bundled share classes, it was difficult for us to justify continuing to offer them on our platforms when a better option is available. The conversion is an unprecedented piece of work but worth the effort. We want to help advisers and clients move to unbundled share classes quickly and efficiently. In an increasingly cost-conscious market demanding both simplicity and transparency, this approach was the only option that made sense to us.'
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