Axa Wealth has said its discount for investors buying its multi-manager Architas funds via its platform Elevate may no longer be viable after the Financial Conduct Authority moved to ban fee waivers.
Fund managers owned by platform providers will no longer be able to waive the platform fee on their products under the FCA’s platform rules, published today.
Axa Elevate currently offers its clients a 75 per cent discount on the platform fee connected to investments in Architas funds, as both companies are owned by Axa Wealth.
However, the FCA has banned this practice with effect from April 2014 in a bid to remove all bias from platform offerings, a move which it said was consistent with the RDR’s aim of removing commission payments to advisers from products.
The FCA said it expected that “product costs should not be used to cross-subsidise the platform charge”.
“The platform charge should essentially be similar across all products on a platform when there is not an appropriate reason for it to vary,” the regulator said.
“So if a platform service provider is also a fund manager, we would not expect the platform to be labelled as ‘free’ if the consumer invests in funds operated by that manager.”
Hans Georgeson, managing director at Architas, said the company was “disappointed” with the move by the FCA.
He said: “Our reading [of the platform rules] is that our discount is viable up to April 2014. The offer can’t be extended beyond that.
“It is a shame because we would like to be able to reward clients for putting business with two parts of Axa Wealth. We feel disappointment on behalf of our customers.
“I have a lot of sympathy with the FCA wanting to level the playing field but this is small fry compared with other issues.”
Last year Axa Elevate waived 100 per cent of the platform fee on Architas products, but this was reduced to 75 per cent for 2013. Mr Georgeson said the company would continue to honour the commitments it has already made for discounts to clients.
Paul Riddell, head of strategic communications at Axa Wealth, said the company would “continue to evolve the proposition”.
“We are not surprised FCA have taken this stance, which is consistent with thinking in CP12/12,” he said.
“As a general principle, we still believe that clients should be able to benefit from a discount where they buy platform and investment from the same company.
“However, we are pleased to be able to continue the offer for at least the remainder of this year and will be pressing for full clarity over the coming weeks and months.”
