Legal & General has provided details for its post-RDR adviser charging rules for individual retail legacy products.
“We’ve been running our RDR programme since the end of 2009 and this is the first phase of a timed release process, which will deliver a full ‘RDR compliant’ product range between now and the end of the year,” said Jamie Vale (pictured), platforms and distribution director, business development. “It will come as no surprise that this is our top priority this year.
“Our first focus has been to ensure that our existing legacy products weren’t affected by RDR implementation. We will be providing further details of how we implement adviser charging on our products and platforms as each phase of the delivery programme goes live and we gear up for the new RDR world from 31 December 2012.”
Commission payments on legacy products:
Payments on products with start dates pre-RDR will be treated as follows:
- Trail commission on existing products will remain.
- For non-advised top-ups on existing products we will pay commission.
- For advised top-ups on existing products no commission will be paid but we will enhance the customer’s terms (by increased allocation or by reduced fund charges).
Trail commission post RDR:
The FSA have provided further clarification in PS12/3 on when trail can continue to be paid. Our understanding is that we will be able to continue to pay commission if the adviser increases the amount invested on a non-advised basis or advice is to not change the current product.
Post RDR, if the customer receives advice, Legal & General will continue to pay commission in the following instances:
Bonds/Pensions
- Trail commission will be continued following an advised insured fund switch, advice to reduce a holding in a life product or advice to take no action.
- Where advice is given to top up or increment a plan trail will be continued on the original investment but is not permissible on the topped-up element of the contract.
Collectives/Platforms
- Advising a customer to switch collectives is advice to sell one product and buy another one. Consequentially, a fund switch on a collective will result in trail commission stopping on the funds that are moved after RDR.
- Where an adviser gives advice to top up or increment a collective that was sold pre RDR, we will continue to pay trail on the original collective investment but the topped up / incremented units bought as a result of advice post RDR cannot pay commission.
- Advice to switch from accumulation units to income units (and vice versa) or reduce a holding will not stop trail being paid.
Vale added: “We are also delivering enhanced training to our adviser support staff designed to ensure they are well equipped to assist independent advisers and our tied advisers in advising under the new regulations in 2013.
“Legal & General has significant scale and our broad product range, diversified distribution and ability to deliver change places us in a strong position to take advantage of the opportunities created in this fast evolving market.”
