Standard Life Investments to end all retail business trail commission within months

The move has been branded “scandalous” and “obscene”, by some advisers.

According to reports, a letter has been sent to advisers by the investment arm of Edinburgh-based insurance giants Standard Life saying all renewal commission paid on the retail class of shares will end from 31 March next year.

As a result, the ongoing charges figure will fall across the entire fund range, cutting fees for 90,000 clients. SLI says there is no function to facilitate ongoing adviser charges.

According to Money Marketing, which claims to have seen the letter, the firm says it wants to align legacy and new business “reflecting the spirit of the Retail Distribution Review”.

Annual management charges are typically being cut by around 20bps.

Currently, renewal commission on bond-type funds is 25bps and 50bps on equity-type funds.

Under the RDR rules, previously agreed trail commission can be paid on pre-RDR investment amounts where products are topped up after 31 December 2012, and on fund switches within a product.

The two-year sunset clause on legacy payments between fund managers and platforms will expire in April 2016.

Responding to the reports, an SLI spokesman said: “Regulatory change has created anomalies and inconsistencies in relation to how investors pay for financial advice on new and legacy (pre-January 2013) UK regulated business.

“These anomalies will become more pronounced with the implementation of the FCA rules (PS13/1) in April 2016.

“In response to this, we have taken the decision to stop paying renewal commission on all business held in our retail class of shares from April 2016.

“We believe this best reflects the evolving regulatory environment and creates consistency for our clients regardless of when they made their investment.

“Also in April 2016, the Ongoing Charges Figure for all clients invested in our retail class of shares will fall. We are proactively contacting all affected advisers and clients to ensure they are aware of our plans. As part of this communication we are reminding clients who have a financial adviser that they may wish to contact them to discuss these changes.”

But advisers say the move – which will see charges fall, but not by the same level as the commission – is an excuse to “pocket the difference”.

Rowley Turton director Scott Gallacher said: “This is another example of Standard Life stealing commission from advisers.

“They’ve acquired assets presumably through advisers with terms of business but now they’re effectively ripping up the contract with advisers, not even rebating all that money to clients.”

He adds: “This is not platform money, it’s disingenuous to quote PS13/1 which has nothing to do with advisers, I think it’s scandalous.”

Bph Wealth Management partner Adam Bell also reacted to the news.

He said: “This will happen more and more, which is no bad thing, really everything should be on explicit fees.

“If they dropped everything by 50bps that would be fine, but to drop it by a little bit and pocket the difference is just laughable.”

He adds: “I think it’s quite obscene Standard Life are saying this is in line with the concept of RDR when they are pocketing the difference.”

But financial planning director at Syndaxi, Rob Reid, now expects the practice to become the norm.

He said: “I’m not at all surprised, I’m mystified why anyone would think Standard Life would do anything else.

“They are the first, they will not be the last.”