Rebates will be passed on to clients in the form of additional units, which the firm believes to be the quickest solution to minimise the tax liability for unwrapped investors in a rebate model.
The unbundled share classes, which will have an annual management charge of 0.75%, will be launched on the Skandia platform within the next three months.
Skandia announced its intention to maintain rebates on the day HMRC said rebates will be subject to income tax from April next year.
The company said it is focusing on adding unbundled share classes with lower AMCs and rebates rather than ‘super clean’ share classes for a number of important reasons:
- It is the quickest solution to minimise the tax liability for unwrapped investors in a rebate model
- It maintains Skandia’s net fund costs which are often the lowest in the market
- It does not hinder re-registration
Skandia estimated 87% of its platform clients hold either a pension or ISA and so would be disadvantaged if rebates were abolished.
What’s more it believes other platforms will have a similar proportion of clients holding ISAs and pensions, so a decision not to develop the functionality to facilitate unit rebates could be detrimental to their clients, especially in cases where their size would mean a decent rebate could be achieved.
The competition
The move is in stark contrast to that of competitor Standard Life, which earlier in the month announced plans to abolish rebates across its platform by 2014.
Standard Life and Skandia have diverged in opinion since the rebate announcement from HMRC – which of the giants is right?
A spokesperson for the company said: “Our priority is to convert the 500 most popular funds on the platform to clean, which account for 90% of AUM. Of these we have already converted 67 and a further 340 are to be loaded imminently, along with 46 SLI funds.
“The remaining 2000 funds will be converted to clean, and we really hope to have a full complement by the summer.”
How will Standard Life respond to claims that getting rid of rebates may not be in client’s best interests? Find out on Portfolio Adviser later…
