Platform giant FundsNetwork has written to advisers outlining its full plans to convert the remainder of its funds to clean share classes in time for the FCA’s April 2016 deadline.
The platform is to roll out an “enhanced switching” tool in the second quarter of this year to allow advisers to switch a client’s portfolio to unbundled shares - which do not pay commission to advisers or fees to platforms - in one go.
In addition, FundsNetwork is planning a series of “optional conversion opportunities”, which will involve advisers opting in to a bulk conversion process to be carried out by the platform.
Head of advisory services Jon Everill said the process would start with a number of “voluntary” periods in which advisers can apply for FundsNetwork to convert shares.
This will be followed by a “final mandatory ‘mop up’ of what is left” to ensure the platform is fully clean-fee before the April 2016 deadline set out by the FCA last year, although Mr Everill said there were still some elements to work through with both the regulator and fund managers.
“By giving advisers time and options it gives them the maximum flexibility,” Mr Everill said. “Ultimately moving to clean is in the interests of most, if not all, of our clients.”
Head of FundsNetwork Pat Shea said in the letter to advisers: “We continue to see an encouraging and significant increase in the adoption of adviser fee arrangements month on month. The intentions [for switching and conversions] provide a lengthy window of opportunity for this trend to continue and [advisers] with the time needed to speak to those of your clients yet to transition to fees.”
In April 2016 platforms will be banned from taking any fees from investments made before the RDR’s introduction at the start of 2013.
From next month they must stop taking fees from investments made after the RDR, and Mr Everill said FundsNetwork had a unit rebate facility in place to ensure the platform complied with this rule change.
FundsNetwork is the latest to set out its full plans for converting its assets to clean fee shares. Standard Life has converted all assets held on its Wrap platform to clean fee shares, while other including Novia and Ascentric have converted roughly three-quarters of their assets, according to estimates from these platforms.
But these three have been criticised by some advisers for effectively ‘switching off’ trail commission at a time when some advisers are still transitioning to adviser charging models.
Other platforms, including Skandia and Cofunds, have chosen to leave advisers to make the change to clean fee shares in their own time, introducing various tools to make the process easier.
Nucleus is only pressing ahead with bulk share conversions when it has made sure that the clean shares are not more expensive than the old ‘bundled’ versions.
