Cofunds has come out in favour of ‘superclean’ share classes, saying that in the wake of the HM Revenue & Cusoms decision to tax rebates it will push to get the “lowest price or preferential share class” for clients.
The platform, which has over £50bn assets under administration and now offers well over 2,700 ‘clean’ share classes, said the result of the regulatory change will be that distributors are able to use their buying power to benefit their clients through means other than rebates.
In a statement Cofunds stressed it will continue to support advisory firms that negotiate an annual management charge discount in the form of a cash or unit rebate, whereby the rebate will be taxed at source.
However, it said it believes the “bigger” story will be the emergence of new, ‘cleaner’ share classes.
Verona Smith, director of marketing at Cofunds, said: “We have always had a consistent position in striving to get the best outcome for our clients - if this is in the form of the lowest priced or preferential share class, then we will push for this.
“In addition, we make a point of not getting in the way of intermediaries negotiating directly with fund managers, and we’ll continue with this approach.”
The stance mirrors that of Standard Life, which announced yesterday (4 April) that it will be seeking to go ‘rebate free’ within 12 months, including pushing for ‘bespoke share classes negotiated directly with fund managers.
Skandia announced this morning that it too would place emphasis on clean fee share classes, though it said it will continue to use unit rebates to facilitate small discounts for clients.
Two weeks ago, HMRC said that that it would treat all rebates - whether in cash or units - as income and tax them accordingly.
