SLI to axe trail commission
Standard Life Investments (SLI) will stop paying trail commission paid to advisers from its UK retail funds as of April next year.
The fund house said the change would lead to more “consistency” for clients regardless of when they had made an investment, in light of both the RDR ban on commission for new business, and the ‘sunset clause’ which will end legacy commission payments on platform business as of next April.
SLI said in a statement: “Regulatory change has created anomalies and inconsistencies in relation to how investors pay for financial advice on new and legacy UK regulated business. These anomalies will become more pronounced with the implementation of the FCA rules in April 2016.
“In response to this, we have taken the decision to stop paying renewal commission on all business held in our retail class of shares from April 2016. We believe this best reflects the evolving regulatory environment and creates consistency for our clients regardless of when they made their investment.”
The commission payments equate to around 25 basis points for bond funds and 50 basis points for equity funds, SLI said.
As a result of the changes, ongoing charges for the 90,000 clients invested in SLI’s legacy retail share classes will fall, typically by between 20 and 30 basis points.
The firm said of this change: “A key decision made was that the cost of investing charged to retail investors dealing directly with SLI would be the same whether the investor had received financial advice or not.
“The charge that will come into effect in April 2016 has been set at a competitive level which covers both the investment management charge and the operational / servicing costs. Standard Life Investments is committed to offering attractive investment products for all investors both dealing direct and via platforms.”
