CompaniesFeb 3 2015

Execution-only broker applies for advice permissions

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Execution-only broker applies for advice permissions

Execution-only broker platform TD Direct Investing has announced it has applied to the regulator for “specific, non-personal” advice permissions as it plans to launch of a range of tools and services which would push it into the threshold of intermediation.

The announcement came in a statement which also confirmed a pricing revamp that will see a number of changes including removing all exit and transfer fees, in what the firm described as an attempt to address exit barriers across the market.

Changes to the exit fees mean stock or fund transfers - both in and out - are now free of charge. Transfer out costs for both Isas and self-invested personal pensions have also been removed.

A move to obtain new permissions come in the wake of a paper by the Financial Conduct Authority last month which attempted to clarify advice boundaries, including when online services qualify as generic regulated advice or even creep into full, ‘simplified’ advice.

In general, a service which guides consumers would probably qualify as ‘generic’ advice under the Financial Services and Markets Act, though if the system involved capture of personal financial information - and thus gave a ‘personal recommendation - it could fall under the RDR definition of full advice.

In a statement the firm said it has submitted its application with the FCA for specific permissions to “provide customers with non-personal, online, advice”, which it said would lead to the provision of “a wide selection of additional support services and tools”.

On pricing changes, John Tracy, head of TD Direct Investing, said: “Lack of transparency, complexity, the transfer process and high exit fees are four factors that can erode people’s trust in DIY investing.

“It’s essential we, in the industry, listen to customers and start to implement necessary changes. This will help DIY investors have greater confidence in saving and investing on their own.”

All funds trades are now completely free following the removal of £40 for telephone funds and unit trusts trades. International trades involve the removal of the £5 surcharge for international equity trades, so may start from £5.95.

Foreign Exchange transactions have a reduction from 2 per cent to 1.3 per cent and more competitive spreads for the most frequently used tiers of 1.75 per cent to 1.25 per cent.

The management fee is now amended to £20 plus Vat charged every six months instead of £10 per quarter. It is now easier for customers to avoid this fee because it can be waived with one trade in the preceding six months.

Mr Tracy added: “We want to build an industry which supports rather than demands, and encourages rather than penalises. Ultimately, we believe investors should have the freedom to make their own investment choices, including which platform to use, and scrapping exit fees is an important first step.

“We believe a key factor to build consumers’ confidence is to review and reform how we, as an industry, do business.

“I’m calling on my peers to work with us on a collaborative approach that will enhance the reputation of DIY investing – in turn I’m urging investors to demand more from our industry. This means transparent pricing structures and hidden penalties.”

In November, Sipp provider City Trustees launched a property transfer campaign targeted at financial advisers, in an attempt to help advisers move dissatisfied property investors away from other Sipp providers.

Last year, Greg Kingston, head of marketing and proposition for Suffolk Life, told FTAdviser: “High exit fees are putting off advisers from recommending a change of provider, and Sipp property investors often baulk at the cost of making the change, even from a provider who’s no longer providing the service they need.”

ruth.gillbe@ft.com

Additional reporting by Donia O’Loughlin