Rathbones awaits RDR rebate clarification from FSA
From Regulation Feb 16 2012 BY: Esther Armstrong
, Senior Reporter
, Portfolio Adviser
Rathbones has released further details of its 'RDR-friendly' share class, which will roll out across its fund range on 1 March, but admitted it might need to move again after the FSA reveals its full position on rebates to platforms.
The Unit Trust Management arm of the group said the institutional 'i-class' units/shares would strip out the 0.5% trail commission and 0.25% platform fee currently included in the annual management charge (AMC) of its funds, halving the total in most cases to 0.75%.
It said the new clean fee structure would accommodate changes in intermediary business models ahead of the implementation of RDR and would enable platforms to provide an unbundled service to advisers.
In a letter to advisers, seen by Portfolio Adviser, Rathbones said: "One of the key elements of the forthcoming RDR regime will be the banning of commission payments by providers to intermediaries and a move to adviser agreed remuneration.
“This is prompting a major shift in business models in the distribution marketplace as advisers move from or plan to move from a commission-based model to a fee-based one."
FSA clarification
Rathbones added that the launch was limited to 'i-class' units/shares for the moment because it is waiting for clarification on the FSA's position regarding cash rebates from providers to platforms.
It said this might warrant a further unit/share class and it would keep advisers informed of further developments once the FSA had revealed its intentions on the issue.
Funds with an existing AMC of 1.5% (the equity and multi-asset funds) will launch a share class at 0.75%, funds with an AMC of 1.25% (Rathbone Ethical Bond Fund) will launch a class with 0.625%, while the Rathbone Strategic Bond Fund, which already has an 'i-class' unit/share class of 0.5% AMC, will remain unchanged.
For intermediaries dealing with Rathbones directly there will be a £1m minimum initial investment restriction, but for those purchasing through a platform the minimum investment restriction has been waived.
Conversion into the 'i-class' units/shares will also be possible from 1 March, but no commission will be payable on conversion into the new share class.
Rathbones has also launched a suite of Key Investor Information Documents for both the new share class and the existing 'r-class' units/shares for its funds. For conversion between unit/share classes intermediaries are required to have seen these documents.
In the letter, Rathbones signed off: "We believe this initiative will help you navigate the changes to your business brought about by RDR."
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