FCA platform paper due in tomorrow

westy22

dunstonh wrote: »

- the whole point of clean share classes as the investment costs the same across the board. Nothing to negotiate.

I think we all know that we are going to end up with several 'degrees of clean' -

some are going to be 'super-clean' i.e. the same price on the platform as that quoted by the fund manager in official literature;

'clean' a small % added on or a small price increase over that quoted by the fund manager;

I'm sure this is not what the FCA intended but I'll wager that it will happen. Presumably HL will want to negotiate a price to them that is either slightly higher than 0.75% or will want the fund manager to cut them a deal to charge them an ongoing charge of only 0.60% or something.

Then, of course, there will still be a platform charge on top!

oldfella

from the FT today ...

Small cash payments of £1 or less and rebates passed directly to consumers in the form of units will still be permitted under the new rules.
But David Thompson, managing director of Elevate, Axa Wealth, said he expected demand for unit rebates to fall, as HM Revenue & Customs had decided to tax them.

grizzly1911

dunstonh wrote: »

Expectation is direct will still use the retail annual management charge and initial charge.



Yes. Although you already are. You just dont know it in many cases.

If it will cost more to deal direct, initial fee and full retail management charge yet these won't be charged if you use a platform but a fee will be paid doesn't really lead to transparency for the investor. It is still a market distortion. It is almost making an intermediary mandatory otherwise you get penalised.

I appreciate that I am paying by increased management charge.

Currently with Cavendish is thecase that they receive additional "kick back" on top of the 0.25% they publicise?

grizzly1911

oldfella wrote: »

from the FT today ...

Small cash payments of £1 or less and rebates passed directly to consumers in the form of units will still be permitted under the new rules.
But David Thompson, managing director of Elevate, Axa Wealth, said he expected demand for unit rebates to fall, as HM Revenue & Customs had decided to tax them.

I thought rebates within an ISA were tax free?

I wonder what proportion of retail clients/funds are in within an ISA wrapper and how many outside.

If you don't pay tax can the tax be reclaimed?

grey_gym_sock

is the photo on the front page of the FCA pdf meant to represent the face of a man who knows he's paying transparent platform charges?

from what they say, i wonder if HL are hoping to get access to cheaper fund classes than other platforms. though they don't explicitly say that. dunston thinks this is unlikely, based on what's happened with IFA platforms. so do the smallest and biggest IFA platforms have access to exactly the same funds and unit classes?

i should think tax on rebates can be reclaimed by non-taxpayers. (dividend tax credits are a rather special case, where it can't be reclaimed.)

MadMat

Am I right in thinking that as I already only hold a clean fund on HL and pay the £2 a month platform charge that none of this is really relevant to me ?

Mat

Lokolo

MadMat wrote: »

Am I right in thinking that as I already only hold a clean fund on HL and pay the £2 a month platform charge that none of this is really relevant to me ?

Mat

Yes but only insofar as HL will be changing their charging structure. So you may find that £2 a month fund charge will turn into a 0.5% annual account charge.

Rollinghome

grizzly1911 wrote: »

Currently with Cavendish is thecase that they receive additional "kick back" on top of the 0.25% they publicise?

No, the fund managers usually pay a platform fee, typically 0.25%, plus trail commission, typically 0.5%, that would have gone to the adviser. HL get both the platform fee and the trail commission, plus other undisclosed payments, and rebate an average of just 0.12% of the trail as a "loyalty bonus". Cavendish returns all of the commission but has negotiated with Fundsnetwork, the platform, to receive 0.05% of their 0.25% platform fee.

MadMat wrote: »

Am I right in thinking that as I already only hold a clean fund on HL and pay the £2 a month platform charge that none of this is really relevant to me ?

Are you sure it is a fully clean fund? HL have been charging an extra £2 a month even on some funds where they get both a platform fee and trail commission but where the commission is slightly below the norm.

If it is a clean fund then HL will want you to pay the same fees as for all their other funds once they're announced. From their various murmurings this currently looks like being on a percentage basis, possibly with a sliding scale for larger investments.

HL are making a lot of the idea that they’ll be able to negotiate lower AMCs from fund managers so that even though their charges are higher they’ll still be competitive with others. That wouldn’t be in the spirit of RDR and seems a bit unlikely to me. Even if they could negotiate lower AMCs, I can’t see any attempt to blackmail the fund managers into not offering the same to other platforms going down well with the regulators. Sounds more like spin to stop existing clients deserting them for as long as possible.

xylophone

I thought rebates within an ISA were tax free?

This is certainly the case at HL - "loyalty bonus" (aka rebate) is now paid gross into the isa account and is not counted as a subscription.

jem16

westy22 wrote: »

I think we all know that we are going to end up with several 'degrees of clean' -

Unfortunately that may well be what happens and it will become a nightmare to compare anything and also to move platforms.

Apparently the FCA rules can't/won't stop this happening.

The FCA said: ‘Our rules do not prevent product providers from varying the price of their fund to different platforms through multiple share classes.

‘However, in this situation firms would need to take account of our rules on re-registration and to present products in a way that is fair, clear and not misleading.’

http://citywire.co.uk/new-model-adviser/fca-warns-managers-clean-funds-no-excuse-for-higher-charges/a676041


There should be one clean share class with all platforms charging the same for that fund. What should be different is the fee that each platform sets and that is down to what they offer the client. However I suppose it's not going to happen in much the same way as the RRP on consumer products ends up with a different selling price depending on the store used to purchase.

In the end, much like commission, it will be the total end price that matters which kind of makes a mockery of explicit charging.