FundsNetwork builds 'no advice' option to counter legacy confusion

Platform FundsNetwork is developing functionality to allow advisers to declare whether or not their post-RDR activities constitute “advice” in a bid to clear up ambiguities surrounding legacy commission.

The adviser fee functionality, to be rolled out in Q3, will enable the platform to facilitate initial and ongoing fee payments under adviser charging rules when ‘advice' has been given on existing contracts.

In its November consultation paper, the FSA set out plans to ban 'legacy' commission - stating if new "advice" is given on a pre-RDR contract resulting in a change to that contract then commission cannot be paid.

But ambiguities surrounding the definition of ‘advice' and the difference between legacy and trail commission have caused widespread industry concern.

Amid the lack of clarity, FundsNetwork said advisers using platforms post RDR need a facility allowing them to state whether new advice has been given on a contract - bringing it under adviser charging rules - or if trail can continue to be paid.

"Because of the ongoing lack of clarity we are building functionality giving IFAs flexibility around adviser fees which will give them the ability to say whether advice was given or not," head of FundsNetwork David White (pictured) told IFAonline.

He added: "When commission is banned we need to be able to allow advisers to take initial fees and ongoing fees."

Meanwhile, White said the platform's planned launch of an unbundled charging structure remains on track, with the new model set for rollout at the back-end of Q1. It will cater for all ranges of share classes.

He revealed the platform has invested "significant funds" into its unbundled proposition, with its development budget doubling over the last two years.

The platform will unveil its charges on launch of the unbundled offering, with White saying he "did not see the need" to follow Cofunds and reveal its prices now.

Exchange traded funds (ETFs) will be the first unbundled funds added to FundsNetwork on the back of adviser demand.The platform is currently holding discussions with a number of ETF providers.

Investment trusts will then launch in the second half of the year, added White, who billed 2012 as a "year of innovation".

Elsewhere, the platform plans to ramp up its discretionary fund management (DFM) capability, with a number of DFMs set to be added this quarter.