FCA platform paper due in tomorrow

oldfella

re the earlier discussion about taxing of ISA rebates ..

from Candid Money ..

HMRC is now taxing commission rebates paid to customers outside of ISAs and pensions

Cygnus_Alpha

I'm going to transfer my ISA from my platform to a platform with clean fund pricing. I've decided on Alliance Trust. They do charge a quarterly fee of £10+vat a quarter but that is a lot less than the 0.5% I'm paying now.

grey_gym_sock

dunstonh wrote: »

One surprise is the FCA confirming that platforms and discount brokers may continue to receive advertising fees from fund managers. Since this is a potential source of bias it's a strange decision.

That is effectively a hidden commission and a surprise that the FCA still allow it. It could be open to abuse. For example, one fund house may decide not to lower its clean charges but pay a larger advertising commission to the platform to keep its fund on some marketing list.

i agree it's asking for trouble. however, the FCA document does say this:

However, we do not expect payments for advertising to be used to help a product provider gain access to a shortlist of funds, influence any ranking of products, or otherwise result in a channelling of business to that product provider.

and that they will keep all the kinds of payments that providers can still make to platforms under review. so hopefully they will change this if it's abused.

grey_gym_sock

this article - http://citywire.co.uk/wealth-manager/hargreaves-lansdown-demands-best-price-for-new-30-fund-buy-list/a675897 - says that HL plan to have a core list of 30 funds within the "wealth 150" (which only contains a little over 100 funds now!), and the core list will only include funds where HL gets a better price.

my guess is that HL would prefer to get fund classes with a lower AMC - mainly because rebates will now be taxable for unwrapped holdings.

and i guess that plan B is for them to get the same clean units as everybody else, but with cash rebates on top. the rebates would go 100% to the customer, and would have to be used to buy more units when they exceed £1 per fund per month.

AFAICS, both plan A and plan B are perfectly consistent with the FCA's intentions. it is very much like the big supermarkets paying their suppliers lower prices because of their bulk buying power. and it would be more transparent than the old system of hidden commissions.

whether HL will get what they want from the providers remains to be seen. clearly, if they get better prices, they won't be the only platform who do.

(i'm still holding HL shares, BTW. might trim my holding, as it's getting too big as a % of the portfolio.)

koru

I have to admire the sheer nerve of Hargreaves Lansdown. In their "position paper" they say:

We support the aims of the RDR. Hargreaves Lansdown has treated its clients well and acts in an unbiased fashion, but some other financial services companies have not. We agree the existence of commission has been a contributory factor to bad advice by others. We therefore support the removal of commission for financial advice.

So the fact that until about a year ago HL did not recommend any investment trusts or tracker funds was nothing to do with the fact that they do not pay commission? Yeah, right!

koru

There are at least three platforms that have significantly larger amounts of assets under administration than HL, two of which are direct competitors of HL in the direct to consumer market: Cofunds and Funds Network. (There's also Skandia, but I think they are focused on providing their platform through advisers.) So, it seems pretty unlikely that HL will be able to negotiate lower AMCs than their main competition. Which means that if they want to sustain higher charges than Cofunds and Funds Network, they will need to justify it on some other basis than offering lower AMCs.

gadgetmind

koru wrote: »

Which means that if they want to sustain higher charges than Cofunds and Funds Network, they will need to justify it on some other basis than offering lower AMCs.

I'd actually be prepared to pay HL slightly more than others because they have very good service. (Note that I haven't tested everyone's service, but my experience with HL seems to match others, and I've had iffy service elsewhere.)

However, I'd only be prepared to pay slightly more via a fixed annual fee and have little/no interest in either higher AMCs or (uncapped) percentages.

I regard £50-£60 pa for an ISA and £120-£150 pa for a SIPP to be fairly reasonable. If I can get a discount on this for having all of our ISAs and SIPPs in the same place, then ever better. As it happens, we have stuff spread around to keep fees low and pay £200 pa for 2xISA and 2xSIPPs in fixed fees and around 0.3% pa in AMCs (slightly more in some pots, slightly less in others.)

One would hope the new regulations would allow me to bring this down. If they don't, what was the point?

grizzly1911

gadgetmind wrote: »

I'd actually be prepared to pay HL slightly more than others because they have very good service. (Note that I haven't tested everyone's service, but my experience with HL seems to match others, and I've had iffy service elsewhere.)

However, I'd only be prepared to pay slightly more via a fixed annual fee and have little/no interest in either higher AMCs or (uncapped) percentages.

I regard £50-£60 pa for an ISA and £120-£150 pa for a SIPP to be fairly reasonable. If I can get a discount on this for having all of our ISAs and SIPPs in the same place, then ever better. As it happens, we have stuff spread around to keep fees low and pay £200 pa for 2xISA and 2xSIPPs in fixed fees and around 0.3% pa in AMCs (slightly more in some pots, slightly less in others.)

One would hope the new regulations would allow me to bring this down. If they don't, what was the point?

Currently with Cavendish/Funds Network and can't fault the service they have provided. 2 X ISA and 1X normal dealing.

I haven't used any other platforms. May try HL for an IT or 2 soon.

Cavendish currently dirty funds rebated.

Something tells me whatever happens I doubt it will be cheaper for me elsewhere. (Worth moving for anyway). I wait with baited breath.

IronWolf

With all this going on I just decided to move my 1 fund holding to outside my isa and transfer the isa from iii to SaxoBank. That way I'm free to chop and change who has my fund any who doesn't.

gadgetmind

grizzly1911 wrote: »

I haven't used any other platforms. May try HL for an IT or 2 soon.

HL's ISA is pretty good for ITs due to the £45pa cap on the 0.5% fee.

I wait with baited breath.

I think you mean "bated breath", which is short for "abated". No-one wants breath that smells of bait!