As soon as it was practical, I made sure all my own fund investments were migrated to a platform with "clean priced" fund units available (and even before that I'd been making use of a trail-commission rebating broker, although I wasn't as quick to get to that party as I could have been).

But it distresses me to have relatives with significant investments who seem to be completely unaware of RDR's reforms, or that funds they're paying 1.5% or more OCF to hold are now available for say 0.7-0.8%. You can talk to people about this stuff and the impact it has over decades-long savings timescales... but they seem to have a curious aversion to doing anything about it, especially anything likely to involve an awkward conversation with their nice "adviser".

My question is: as part of RDR's "endgame", is there some compulsion on the fund houses to actually phase out the high-charging fund unit types and migrate holders to the cheaper ones? If so, what's the timescales for that to happen? If not... what does change? I have an idea the payment of trail commissions was due to be phased out... but if the high-OCF units don't reduce their charges do the fund managers just pocket it?

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  • By OCF you mean the total ongoing charge right? – marktristan Apr 21 '16 at 14:21
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    @marktristan: yes, OCF=Ongoing Charges Figure; it replaced the TER (total expense ratio) which used to be quoted until a few years ago (and before that you used to see AMC "annual management charge"). I'm not actually that clear what the differences between OCF and TER are: some comments from an unimpressed pundit at monevator.com/the-ongoing-charge . – timday Apr 21 '16 at 17:19

There are some signs of progress: for example, stories in 2017 and 2018 have the FCA "consulting" on forcing a migration to cheaper units and changing things to "allow fund managers to move investors into cheaper share classes without getting investors' permission". But fundamentally it seems the industry is - unsurprisingly - still dragging it's heels as hard as it can on this.

Update: The last most concrete thing I've seen on this (from 5th April 2018) is: "The Financial Conduct Authority (FCA) has no immediate plans to introduce a ban on trail commission paid to advisers on legacy products." (e.g here or here; that former link includes the shocking statistic that "one third of retail assets invested in UK funds are held in pre-RDR share classes that still pay rebates to financial advisers"). There do however seem to be some interesting developments (a 24th May 2018 story) with platforms attempting to identify advised and unadvised clients and cutting off the trail commission where they deem the client to have been "orphaned".

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