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M&G: Advisers don’t want ‘complexity’ of superclean shares

M&G has told FTAdviser that it has “no plans” to offer major platform groups ‘superclean’ share classes with preferential rates, stating that this adds “extra complexity” for financial advisers who are still trying to come to grips with the Retail Distribution Review.

Andrew Watson, director of UK advisory and partnership sales, told FTAdviser the fund manager has no plans in the near future to offer big platforms preferential deals, despite claims from several operators that they will push managers for unique rates following the ban on rebates.

Mr Watson added that while he would not categorically rule out the move altogether in the future - he said he “never says never” - ‘superclean’ shares would add further complexity to advisers.

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M&G has previously publicly stated that superclean shares could be problematic for fund groups as it could cost tens of thousands of pounds to introduce each new class.

Following news that HM Revenue and Customs will tax unit and cash rebates, as well as regulatory rules banning cash rebates on existing and legacy business, several platforms have announced moves to rebate-free ‘clean share’ classes.

Standard Life then coined the term ‘superclean’ share classes, saying it will use its buying power to negotiate better rates that mimic the discounts available via rebates through a clean share class.

The concept has proved controversial with smaller and medium-sized wrap platform operators such as Axa Elevate, Novia and Transact demanding they be given access to any new share classes issued.

Mr Watson said: “It would be wrong to completely rule it out, but at this stage we have no plans to launch any further share classes, including any so called ‘superclean’ share classes.

“We’re only seven months into RDR and the sense I get from talking to advisers is that their priority is embedding RDR within their businesses, before considering the need for new share classes, if at all.

“Multiple share classes often produce an extra layer of complexity and we know this complexity isn’t something that many IFAs want.”

Many fund groups have so far remained tight-lipped about their position and whether or not they are in negotiations with providers.

Aviva was the latest major provider to speak out against the creation of ‘superclean’ shares by fund houses for particular platforms, saying such a move could inhibit competition and would raise barriers to entry for the sector.

James Dalby, market intelligence manager at Aviva, told FTAdviser that the ban on rebates should force platforms to compete on servicing and platform pricing, rather than focusing attention on fund pricing.

Fidelity also previously told FTAdviser that although it will provide ‘clean’ share classes for most of its fund range it will not go as far as giving different rates to different providers, saying it has “no plans” to launch further share class iterations.