Aegon under fire over platform charges

Aegon under fire over platform charges

Aegon has been criticised for changing the way it charges investors who have previously used the Cofunds platform.

Over the May Bank Holiday weekend more than 400,000 users of the Cofunds retail platform and £37bn of assets were moved across to the Aegon Platform.

Aegon bought Cofunds in 2016 for £140m and has been planning the integration of the two platforms ever since.

The move was the third stage in the integration of Cofunds with Aegon, with the Investor Portfolio Service and institutional service having upgraded in December and March respectively.

Ahead of the switchover of assets as part of its integration of the Cofunds business, Aegon recently announced that it will levy charges based on the value of the portfolio on the last working day of the month.

This differs from the approach taken by Cofunds, which calculated the fees daily and then charged investors once a month.

Richard Cohen, adviser at Nsure Financial Planning in Worthing and user of the Cofunds platform, the change could potentially mean a 30 times increase in the month on ongoing charges for any of his clients who invest on the last day of the month.

He said: "While a client making a withdrawal at the end of the month would be better off, Cofunds boast about their net inflows so this (change to charges by owner Aegon) will clearly be a profitable move for them.

"Adviser charges are to be calculated in the same way. This may cause problems for many advisory firms who charge clients on a percentage basis, as most terms of business will only allow them to apply ongoing charges based on the client's actual assets under management over the time they are actually managed.

"With a daily calculation, fluctuations over the month are taken into account, whereas with a single spot valuation at the end of the month it may be a particularly high or low day for the investments meaning that the platform and the adviser will be under or, worse, overpaid.

"Every collective fund calculates charges on a daily basis and only charges for days you are actually invested in them, as does every other platform we use. How can it be right for a platform to charge for days when you were not invested with them?"

Mr Cohen said when he flagged the issue with Aegon, he was told that clients of the Cofunds platform were informed of the change in a terms and conditions sent out to them by Aegon.

Bur Mr Cohen said the terms and conditions document was 55-pages long and argued the change may have slipped under the radar of many advisers and their clients.

Responding to Mr Cohen’s concerns, an Aegon representative said: "The Cofunds approach to charging differed from Aegon's, so it was important to have a consistent method.