The Share Centre, the independent retail stockbroker, will cease to offer fund administration services to external clients.
Decision by the AIM-listed company follows a review of its investment management and fund administration subsidiary Sharefunds. It will give notice to its = client Way Fund Managers that it will terminate its fund administration services to the company by March 2013.
This market is changing in important respects as a result of the decisions of the FSA, said the Share Centre in its interim results.
The Financial Services Authority is proposing a ban on all payments from product providers to platforms. This would apply whether an investor using a platform is receiving advice from an investment adviser, or has made his or her own investment decisions.
As a result of these, trail commission on many types of fund distribution will end from January 2014 and the attitude to hosted fund administration has become antipathetic. We have decided that in any event it is best to concentrate on internally managed funds and reduce external dependencies.
Sharefunds will continue to provide fund administration services for a handful of third parties.
The Share Centre added: There will be a similar level of cost reductions as the operating model is scaled back to fit the requirements of a smaller number of funds. Combined with the expected growth in in-house funds the impact of this change on profitability in 2012 and 2013 is not therefore expected to be material.
(JDC)