Are all S&S providers now RDR compliant?

IronWolf

I am thinking of transferring my S&S ISA to another provider with lower charges, but was wondering whether we should expect any more fee changes in the coming year or have they all now finished them.

grey_gym_sock

RDR compliant, yes. platform review compliant, no. because the latter won't come in for at least another year.

the platform review is more relevant to providers like TD Direct. so more changes are likely.

TD appears to be running a loss leader on some investments currently. i.e. they let you hold some funds (e.g. vanguard) for no fee, though these funds don't pay them any kick-backs, so they aren't being paid at all. so this is likely to change at some time. still might be worth taking advantage of it now, though

jem16

IronWolf wrote: »

I am thinking of transferring my S&S ISA to another provider with lower charges, but was wondering whether we should expect any more fee changes in the coming year or have they all now finished them.

RDR is in force now but it really only impacts advised cases. The main changes for the DIY investor will come about with the Platform review which is not due till the end of this year.

So likely still to be more changes.

IronWolf

Is the platform review likely to only affect funds, or will it affect direct shareholdings? I know that iii introduced quarterly fees, I just dont want to transfer only to have TD introduce them.

grey_gym_sock

the point of the platform review was more about hidden commissions paid by funds, but it can affect shares, too. TD are similar to iii in that they cover both funds and shares.

jem16

IronWolf wrote: »

Is the platform review likely to only affect funds, or will it affect direct shareholdings?

It will affect all holdings via a platform.

Previously investments such as trackers, ITs and shares paid a lower amount as the platform was receiving commission payments from fund houses through managed funds. With the loss of that revenue, the platform providers will have to make explicit charges with all investments being charged in exactly the same way.

grey_gym_sock

jem16 wrote: »

Previously investments such as trackers, ITs and shares paid a lower amount as the platform was receiving commission payments from fund houses through managed funds.

this is correct for trackers. some of them pay commissions, but generally lower commissions than managed funds.

for ITs and shares, there have been no commissions from funds houses, but on the other hand you pay dealing commissions to the platform when you buy and sell, which you haven't usually done for funds. so it's not so obvious that holders of ITs/shares have been subsidized, though it may be so.

jem16

grey_gym_sock wrote: »

for ITs and shares, there have been no commissions from funds houses, but on the other hand you pay dealing commissions to the platform when you buy and sell, which you haven't usually done for funds. so it's not so obvious that holders of ITs/shares have been subsidized, though it may be so.

No I agree it's not as obvious.

However if you use a platform there really should be the same cost to all irrespective of type of investment held. So for some the cost will rise and for others it will fall. For some it will be pretty much the same.

dunstonh

The idea of the platform review is to remove the bias that exists with some investment types. Commissions from managed funds, for example, have been used to cross subsidise other investment types. With no commissions coming in to allow cross subsidy, you would expect the charges to go up on what are currently non commission paying assets. The iii model fits with RDR and platform review.

Cross subsidy could still occur as a platform with a lot of legacy commissions and will continue to receive these may use some of that to phase in charges over a slower period rather than making the move in one go as iii did.

IronWolf

Are iweb compliant with the platform review or could there be changes in the future?

dunstonh

I dont know what they charge but one way to tell is if they use institutional/clean funds or rebate not only trail commission but also platform commission. Look up schroder Income and that should have an AMC of 0.75% in clean form (class Z). If it says 1.5 without a 0.75% rebate then its not platform review compliant.

Another way to look at unbundled platforms is that all the charges should be explicit
1 - charges for platform
2- charges for investment
3 - charges for adviser (where there is one).

The platform charges should not differentiate between investment types other than dealing costs or things explicit to that type of investment which cannot be avoided. The investment costs should be clean or any commissions of any type rebated. The adviser cost, if any, should be explicit.