Skandia International is launching a new generation of portfolio bonds that are designed to fit the new UK regulatory landscape taking shape in 2013, the firm said.

The company, which is the offshore business of London- and Johannesburg-listed Old Mutual Wealth Management, is to roll out the products for UK customers on 31 December.

The new bonds, which will be in line with the Retail Distribution Review requirements, are powered by Wealth Interactive, the new wealth management service launched earlier this year by Skandia International.  Wealth Interactive provides advisors access to tools and services, enabling them to manage client investments online.

The RDR reform programme stamps out the use of trail commissions on financial products paid to advisors, part of an attempt by policymakers to make advice more independent. A number of other wealth managers have launched RDR-compliant products ahead of 2013.

Skandia International’s new wealth management service will consist of the European Portfolio Bond, offered by the Dublin-based Skandia Ireland, and the International Portfolio Bond, available in either life assurance or capital redemption options, offered by the Isle of Man-based Royal Skandia. 

“Whilst making our proposition ready for R-Day in the UK, we have also been working hard to deliver additional benefits to advisors and customers alongside the new regulatory requirements,” said Michelle Andrews, marketing director at Skandia.

 “Our new Portfolio Bond proposition in the UK will not only facilitate a range of advisor charging options and pass rebates back into customer’s bonds, it will also provide many additional features and value-add services to benefit both advisors and customers.  These include the ability to manage investments online, straight through processing, access to sophisticated investment tools and detailed fund information,” said Andrews.

Offering a range of charging options, which can be adapted to fit the clients’ needs, as well as the advisor’s business model, the new products, will ensure that any fund rebate arrangements already in place, are to be refunded in full to the customer’s bond, the firm said in a statement.

In the interim

Until 30 December, advisors can continue to submit applications for new business, as well as top-up requests for existing portfolio bonds. Furthermore, on provision of evidence that advice has taken place before 31st December, new business and top up instructions received up until 5th April 2013 will be treated as pre-RDR business and continue to facilitate the payment of commission, the firm said.

Move of existing products to RDR

After 30th December 2012, all current portfolio bond products sold by Skandia International in the UK will close to new business, although the option to make top-ups will remain available, and any trail commission payments due on investments made pre-RDR will continue.

However, if a top-up is received after 30 December, any existing trail commission will cease and initial commission will not be payable. Fund switches within the existing portfolio bonds will not trigger advisor charging, even if these occur in 2013.

The firm said there will be no obligation for advisors with existing customers to submit the current bonds and replace them with the new products in order to comply with the RDR requirements. During 2013, all Skandia International portfolio bond policies taken out by UK customers in the pre-RDR regime will be upgraded to adopt the Wealth Interactive functionality and existing customers will benefit from the enhanced services at no extra cost, the firm said.