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Old Mutual Wealth sets out plans for sunset clause and share class conversions


Old Mutual Wealth has set out it plane approach to the sunset clause in the FCA’s platform paper. The firm plans to give advisers and their clients as much time as possible to move to adviser fee arrangements. 

At the same time, Old Mutual Wealth is also announcing the launch of a platform-led share class conversion process, with the first conversions taking place in February 2015.

FCA policy paper PS13/1 banned platforms from retaining rebates on new business from April 2014. From April 2016, this ban extends to existing business under a ‘sunset clause’, necessitating a move to an unbundled platform charging basis.
For Old Mutual Wealth this is applicable to ISA and Collective Investment Accounts. Its Retirement Account and Investment Bond are not impacted.
Separately, a multitude of new share classes have become available and Old Mutual Wealth will also be helping advisers convert clients to unbundled or ‘clean’ share classes.
The process

Stage 1 – share class conversions

• Nearly 75% of assets have already moved from commission to adviser fees. Those clients and their advisers will not be impacted by the sunset clause.

• In Feb/March 2015 Old Mutual Wealth will bulk-convert all clients in our unbundled platform charging structure, for all wrappers, to unbundled share classes, provided the customer is not disadvantaged by the move.

• Clients will continue to receive the benefit of rebates where Old Mutual Wealth is able to achieve preferential terms.

• The bulk-conversion process means Old Mutual Wealth will take responsibility for notifying customers of the changes and ensuring they are invested in the best value share class available through Old Mutual Wealth. Advisers will not need to carry out complex and time-consuming fund switches and clients will not incur any transaction costs or out of market risk.

Stage 2 – sunset clause + further share class conversions

• All ISA and CIA clients remaining in a bundled platform charging structure in December 2015 will be moved automatically into the unbundled platform charge basis. This gives advisers as much time as possible to move to fees while allowing Old Mutual Wealth to meet the requirement of the FCA’s PS13/1 policy paper efficiently. There are no impacts for Bond and Pension customers.

• At the same time as being moved to the unbundled platform charging structure, Old Mutual Wealth will automatically convert clients to unbundled share classes if they represent better value.

Mike Barrett, investment platform expert at Old Mutual Wealth, says: “Since the introduction of the FCA platform paper we have always put advisers in control of the move to unbundled platform charging. This has so far seen nearly 75% per cent of assets move. As the sunset clause approaches, we will work with those advisers that still have business in a bundled platform charging structure to help them transition to adviser charging before implementing a bulk conversion in Q4 2015.
“Our share class conversion process means we will take responsibility for ensuring customers are invested in the most appropriate share class. Advisers just need to focus on moving clients from commission to fees and we will also support them in that process.”

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