PlatformsJul 8 2013

7IM overhauls platform pricing in response to FCA rules

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Seven Investment Management (7IM) has revamped its platform pricing after the FCA’s most recent paper moved to ban cross subsidisation.

The company had been waiving the platform fee for investors who bought 7IM funds on its platform, something which was allowed under the regulator’s rules.

But in the FCA’s platform paper in April, the regulator moved to stop companies which had a fund arm and a platform proposition from cross-subsidising the two businesses and said it would ban cross subsidisation from April 6 next year.

The FCA said in April it expected that “product costs should not be used to cross-subsidise the platform charge”.

Now 7IM has launched new share classes for its funds on the 7IM platform which will be 25bps lower than the current institutional share class.

The 7IM platform fee for investments in 7IM funds will increase from zero to 25 basis points. The share class will not be transferable meaning any transfers off the 7IM platform will require a share class conversion.

Tom Sheridan, chief executive, said the company had moved to “satisfy the new requirements and to simultaneously ensure that our clients are not disadvantaged”.

“We think that this structure allows us to ensure that neither the client nor the planner nor adviser is in any way disadvantaged, that there is no question of any platform user subsidising investors in 7IM funds and that we can continue to provide a highly cost effective investment service for the market,” said

7IM and Axa Wealth were caught by the change in the rules laid out by the regulator earlier this year. Axa had been allowing clients on its Elevate platform to buy its Architas multi-manager funds at a discount but following the platform paper said it would be reviewing its proposition.