For pre-RDR commission based products, trail commission will remain, and although the client can reduce this, any increase would end the flow of trail commission and trigger adviser charging. The trail commission can however be redirected to a new adviser under instruction from a client, and for advised top-ups taking place post RDR on pre-RDR products an initial adviser charge can be made.
For post-RDR products, adviser charging can be facilitated in one of two ways.
The first approach, which Legal & General called ‘Premium Plus’ deducts the charge from the client payment prior to investment in the bond.
The other way of doing it is by ‘Partial Withdrawal’ where the charge is deducted from the assets in the bond, which will be treated as a partial withdrawal for tax purposes.
If the client instructs, ongoing adviser charges can be altered at any time.
David Fagan, chief executive of Legal & General International (Ireland) said he expected its offshore bond would be RDR ready “well in advance of year end” with a high level of flexibility on both adviser charge payment and trail commission.
He added: “Provided we have explicit instructions from clients, we can facilitate payment of an adviser charge for both pre and post RDR business.
"As we are accountable to HMRC for money being paid into and out of a bond, we will closely monitor payments taken from the bond assets, as these will count towards the 5% annual tax deferred withdrawal allowance.”
