Platforms: Clients ‘better off’ with clean fee shares

Ascentric and Novia have claimed “the vast majority” of clients will not be worse off with a clean fee share class when the platforms start to convert clients in bulk away from bundled shares.

In a guidance consultation paper published yesterday, the FCA told platforms that any conversion of share classes in bulk from bundled to unbundled share classes - which would switch off trail commission and rebates - should only be made “if it is fair and in the client’s best interests”.

FundsNetwork and Skandia have opted not to make such changes themselves, instead letting advisers switch their clients to unbundled shares. Other platforms, including Nucleus and James Hay, are converting share classes only when the client pays less or the same in fund charges as they did in a bundled share.

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Ascentric managing director Hugo Thorman said he was happy that bulk conversions were “the right thing to do” and hit back at claims that clients could be worse off with ‘clean fee’ shares.

“It is extremely rare that a client would be worse off,” he said. “Other charges passed to the fund on top of the annual charge may be higher for clean fee shares because there is less money invested, but are we as platforms supposed to monitor them to see when they become cheaper?

“We’re happy that our approach is the right thing to do.”

Novia chief executive Bill Vasilieff said the “vast majority of clients won’t be disadvantaged” and emphasised that his platform was currently only converting in bulk where investors will be paying less or the same in charges.

“There are some funds where it is not clear [if they are cheaper], and we are writing to advisers and clients to give them the option,” Mr Vasilieff said. “It is still moving and many of these shares are not the final price.

“Fund managers are going to shoot themselves in the foot if they do not sort out their prices as advisers and clients will just move.”