Share class conversions begin as Novia sets out plans

The conversion of bundled share classes to so-called ‘clean fee’ share classes has begun in earnest with Novia, Ascentric and Alliance Trust Savings setting out plans to switch investors in bulk in the coming months.

Novia is to begin conversions in October, with the platform aiming to have turned off cash rebates and trail commission payments from the majority of investments by April next year.

Both Ascentric and Alliance Trust Savings have also begun writing to advisers and investors informing them that their existing investments will be converted in bulk to clean fee shares.

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Standard Life announced last month that it would be starting conversions in November.

Last week the FCA announced it would allow cash rebates to continue to be paid from funds bought before the RDR, provided no advised changes had been made to the investments. This is in line with similar rules on commission paid by pre-RDR investments.

But some platforms have taken the view that clean fee shares are a simpler solution, particularly in light of HMRC’s decision to tax rebates from investments not held within an Isa or a pension wrapper.

Novia chief executive Bill Vasilieff said the FCA’s view on cash rebates did not change his stance “in any way”.

“We are very keen that our advisers and their clients avoid the potentially very confusing middle ground of some shares having rebates and some not and even some that had rebates no longer having them due to a disturbance event,” Mr Vasilieff said.

“By taking a clear stance on this issue it is our view that we will avoid this confusion between advisers and their clients and will demonstrate our absolute commitment to providing a clear, transparent and unbundled pricing structure.”

Patrick Mill, managing director of Alliance Trust Savings, said he hoped to have completed converting bundled shares to unbundled by the first week of December.

“By the end of the year we will not have a single rebate,” he said. “HMRC taxing rebates brings another level of complexity - why don’t we just make life simple for ourselves and clients?”

Ascentric managing director Hugo Thorman said he had begun writing to investors on his platform regarding conversions of bundled share classes.

“Share class conversion is a big project,” Mr Thorman said. “Advisers can do it themselves but platform conversion is free of capital gains tax. It’s far better to be done by platforms and transfer agents.”

Fund managers have been rolling out ‘clean fee’ shares since 2011, stripping out commission payments to advisers and kickbacks to platforms in compliance with rules introduced under the RDR.