Aegon platforms to switch legacy assets by end 2014

Aegon has confirmed today (13 February) that its retirement platforms Arc and One Retirement have fully switched to clean share classes for new business in line with FCA rules banning cash rebates that come into force in April.

Aegon said in its latest update that with a full suite of clean funds already available, only clean funds may be selected for new instructions from today (13 February).

Existing investments will not be moved automatically, with Aegon confirming it will convert rebate-paying funds into their clean equivalent during Q2 and Q3 2014 if the adviser has not already selected clean funds for their client.

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Financial Conduct Authority rules require all new business to be placed in cash-rebate free share classes from April 2014. Legacy business can continue until April 2016 and platforms can continue to facilitate discounts through unit rebates.

The FCA has stated that conversion to clean share classes must not take place if there is a risk of detriment to the client, with platforms required to either leave the decision on conversion of legacy assets to advisers or to offer them at the least a time-limited opt-out from any conversion.

From 22 March, Aegon will redirect future contributions for regular premium business currently going into a rebate-paying share class to a clean alternative where one exists. In the few cases where a clean version of the same fund is not available, advisers will be asked to designate an alternative fund.

Aegon also said that where an investor has rebate-paying funds which are automatically re-balanced or in a model portfolio, these facilities will be unavailable until clean funds are chosen, to avoid automated payments into rebate paying funds.

Nick Dixon, investment director at Aegon UK, said: “Aegon is pleased to confirm a full suite of clean share classes which the majority of advisers have already adopted for their clients.

“Where advisers have clients in rebate-paying share classes, we will work closely with them to help manage the transition.”