This infographic shows a timeline of Retail Distribution Review changes.
Hide text version
New regulations take effect in 2014 that will change the way the funds industry operates, including how you pay to invest in our Funds Market. The aim of the Retail Distribution Review (RDR) is to give investors more clarity about what they pay and to whom for investment services.
From 1 March, you'll pay two annual charges to invest in funds: one to the fund manager and one to us for our services. These changes are likely to result in lower fees for most Barclays Stockbrokers fund investors. If your fund holdings total less than £4,000 it is likely you'll pay more.
Here are the key dates you need to be aware of:
Barclays Stockbrokers sends information to all clients about the changes resulting from RDR. This includes details of how annual management charges (AMCs) are, in most cases, being reduced with the introduction of "clean share classes". Unlike the "bundled share classes" they replace, clean share classes don't pay a fee known as a "trail commission" to Barclays Stockbrokers for our services.
Bundled share classes will no longer be available in funds where a clean share class has been introduced. This ensures that no clients buy a more expensive share class than they need to. From now on, when you invest in a fund, it will be in a clean share class if this is available, and for the majority of Barclays Stockbrokers clients this will mean lower costs overall. You will still be able to sell any existing holdings in bundled share classes as normal. However, if you are buying funds, we will make sure you get the lowest-cost share class we have on our Funds Market.
Barclays Stockbrokers begins charging a Fund Administration Fee on clean share classes (with the first instalment of this charge payable in November). The Fee will be 0.35% per year, with a minimum fee of £35. It replaces trail commissions as the way we charge for our services. We will also start to convert existing fund holdings to the lower-cost clean share classes, but only where the total overall cost to you (the clean AMC plus the Fund Administration Fee) is the same or less than the cost you are currently paying.
1 MARCH to 31 OCTOBER
Investors holding bundled share classes are transferred to clean share classes (unless they opt out of the process) with Barclays Stockbrokers processing conversions fund by fund. While each conversion is taking place, there will be a short period of about two weeks in which you'll be unable to deal in the fund in question. After that, you'll benefit from a new, lower AMC in most cases.
From 6 April 2014 we will no longer receive a share of the fund AMC from fund managers on any new fund investments. Instead, you'll pay two separate charges - one to the fund manager to manage the investments and one to Barclays Stockbrokers for the investment administration of your fund. Although you'll pay two charges, we believe the overall cost will be lower for most funds investors.
The first Fund Administration Fee is calculated for the period 30 September to 31 October. This is based on a rate of 0.35% per year for the period that you have held clean share classes. The minimum Fund Administration Fee does not apply on this occasion since you may hold a fund that only recently converted. We do not want you to be penalised.
The first Fund Administration Fee is deducted from your account according to your preferences - either as a charge to your Barclays Stockbrokers account or to your external bank account. From now on, you'll pay the Fee in quarterly instalments. The minimum charge is waived for this instalment.