My ex-IFA and his trailing commission

johnbax

In 2012 on the advice of an IFA I put a lump sum into Skandia (now Old Mutual) accounts. I have no complaints about the performance of this investment, which now amounts to around £80K. However, in October 2013 my IFA informed me that he was ceasing to be an IFA and was attaching himself to St James's Place, and that he was transferring 'the administration and servicing' of my investments to an outfit called Policy Services Ltd, based in Scotland. Since then I have heard nothing either from him or from Policy Services, whoever they may be. However, I note that I am still paying 0.5% a year in adviser fees, jointly to him and to Policy Services, from neither of whom I have received any service since October 2013. Can I stop paying this trailing commission just by informing the ex-IFA, Policy Services and Old Mutual that I no longer have an IFA? Or is he entitled to it in perpetuity - or until I move my money elsewhere?

xylophone

http://www.theguardian.com/money/2004/jan/25/moneyinvestments.observercashsection

This is an old article - have you checked the situation with Skandia?

See also these recent articles

http://www.moneyobserver.com/our-analysis/sales-commission-still-alive-and-kicking

http://www.thisismoney.co.uk/money/investing/article-2809925/How-make-sure-not-paying-commission-investments.html

dunstonh

Can I stop paying this trailing commission just by informing the ex-IFA, Policy Services and Old Mutual that I no longer have an IFA?

It will automatically cease in April 2016. However, before then, you can notify Skandia or policy services that you wish to cease ongoing trail and have future trail rebated to you. Skandia have a form for this so expect policy services to send it to you.

johnbax

Thanks for this speedy response - much appreciated.

If it's not a daft question (and even if it is), why will this cease in 2016?

And also, I have the impression that if I ask for the trail commission to cease, Old Mutual will keep the money for themselves and not give it to me, because it comes from a rebate from the fund managers. Indeed, they say the trail commission 'does not represent an additional cost to you'. If so there would hardly be any point in my asking for it to cease. Or would there?

Your_Hero

Johnbax wrote: »

Thanks for this speedy response - much appreciated.

If it's not a daft question (and even if it is), why will this cease in 2016?

It is part of the FCA efforts to remove all commission payments and that is the deadline set for the legacy investment plans.

And also, I have the impression that if I ask for the trail commission to cease, Old Mutual will keep the money for themselves and not give it to me, because it comes from a rebate from the fund managers. Indeed, they say the trail commission 'does not represent an additional cost to you'. If so there would hardly be any point in my asking for it to cease. Or would there?

They can't keep the money for themselves, the RDR rules prevent them from keeping it now. They must rebate it to you if you stop the ongoing servicing.

dunstonh

And also, I have the impression that if I ask for the trail commission to cease, Old Mutual will keep the money for themselves and not give it to me, because it comes from a rebate from the fund managers. Indeed, they say the trail commission 'does not represent an additional cost to you'. If so there would hardly be any point in my asking for it to cease. Or would there?

In the case of life assurance or pension contracts, it can be the case that the provider keeps the commission and doesnt rebate it. However, with unit trust/oeics with fund supermarkets that is not the case. (direct with fund house can also see the fund house keep it if you dont switch to clean share class - doesnt apply to you but there may be others reading where it does apply to them)

johnbax

Thanks, that's very helpful.

The amount of money involved is not huge if it's going to stop in April 2016, but I resent paying it to two firms neither of which is actually offering me any service and both of which are difficult to contact should I require any. I can't even log into the part of the Policy Services website which is for 'clients introduced by St James's Place' because they havn't sent me a username and password, or indeed anything else. They give no email address. Come to think of it I am not even sure what their role in my life is meant to be. My original IFA, Oyster has withdrawn into his shell and effectively abdicated his role, since I havn't been able to contact him either. Even firing these guys is going to pose communication problems. Will it be enough just to tell Old Mutual that they are no longer my advisers? I find this behaviour bizarre, but this may just be because I am unused to the ways of the financial services industry. Sorry to rant on, you've all been very helpful.

dunstonh

An IFA going to SJP is not doing it to improve service or offering. Its not done for your benefit.

You can tell Old Mutual that you no longer have an IFA and wish the existing one to be removed (policy services are not IFAs. They just collect agencies for SJP reps to be paid a percentage of the commission). Also state that you would like the trail commission to be rebated to you going forward. Old Mutual have also brought in a new charging basis (you will be on 1 or 2. the new one is 3). It may be that moving to 3 is a good thing to do to too (not always).