FundsNetwork and Cofunds have hit out at Skandia after it suggested three platforms are collecting up to £13m a year in potentially hidden switching charges.
Skandia believes FundsNetwork, Cofunds and Transact wrap are taking “big business” on the charge. It says when these are combined with fund manager charges it is “virtually impossible” to disclose the full cost to clients at point of sale.
Peter Jordan, Skandia proposition marketing head, says the absence of consolidated rules on switching charges leads to potential non-disclosure issues. He believes as some clients may not be aware of these charges, raising clear TCF concerns.
“If they want to continue to enforce this charge they will need to make a better effort of disclosure,” Jordan says.
“This is the single biggest issue in the platform market at the moment.”
However, FundsNetwork sales and marketing head Rob Fisher hit back at Skandia for focusing on just one of a number of platform charges, rather than the overall cost structure.
“They make a sensible general point, in calling for advisers to be fully aware of the different charging structures in the market,” he says. “But all our charges are fully disclosed and understood by clients at the beginning of the sale.
“It’s very easy to focus on one (charge) area; for example we don’t have an annual wrap or account fee.”
Cofunds sales and distribution managing director Andy Creak agrees with Fisher.
“Pricing needs to be looked at comprehensively. Looking at just one element does not give a true picture; all charges have to be taken into account from platform fees to transaction charges,” he says.
“Advisers need to look at the benefits together with the total costs to a client, not just individual transactions.”
Transact was not available for comment.
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