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Frequently asked questions

Fees and charges

The Financial Conduct Authority (FCA) is the official regulator for the conduct of financial services companies in the UK.  One of their aims is to make sure that investors know exactly how much they’re paying for the services in relation to investments they hold.

To help make charges more transparent and easier to understand, the FCA has introduced some new rules that affect how customers pay for investing through platforms like Legal & General’s Investor Portfolio Service (IPS). The changes are our response to these new rules. 

Legal & General have sent you a ‘Breakdown of Charges’ document.  This gives you an estimate of what your charges would be after 1 April 2016 if you continue to stay invested in the same funds.

You can also see a list of the new commission charges here.

The OCF is calculated by the fund manager and indicates the charges you’re likely to pay them over a year for holding one of their funds. The fund manager keeps some and pays Nationwide and IPS an amount out of the OCF:

  • Fund Manager Charge – this is kept by the Fund Manager for providing and managing the fund
  • Nationwide Commission – we receive commission for the advisory services we provide. From 1 April 2016 this will be no more than 0.50% per fund, which may be lower than the commission you’re currently paying
  • IPS Fee – Legal & General receive this for setting up and administering your investments and transacting on your behalf through IPS

The new charges will apply from 1 April 2016. 

There are three reasons why your charge may be different from 1 April 2016:

  • The existing IPS Fee varies across each individual fund, while the Platform Charge is a fixed percentage charge across your whole investment.
  • Any rebate you're due to receive from funds not held in an ISA is subject to tax to comply with HMRC regulations. Where relevant, this tax amount has been included in your new costs calculation. Please see below for more information on rebates.
  • Nationwide Commission will decrease on some funds so that the maximum commission is 0.50% per fund. Nationwide have reduced their commission as part of their commitment to deliver value for money for customers.

Please read the 'Breakdown of Charges' document that Legal & General have sent you as it shows how each fund you're invested in is affected by the change.

You don’t need to give consent or take any action. This is simply a different way for Legal & General to take the fees applicable to your investment. It’s important you understand the impact on you, especially where the changes could mean you have an additional income tax liability on rebates into an OEIC/Unit Trust. 

If you’re not happy about the changes, you need to tell us what you’d like to do with your IPS holding before 1 April 2016. You have two other options:

  • You can either sell your investments and receive the proceeds, or
  • Move your holdings to another provider

Please call Legal & General’s Customer Services on 0345 272 00 89 (Mon to Fri, 9am - 5.30pm – calls may be recorded) if you need more information on these two options.

Please note that Legal & General are unable to advise on your investment(s).

Your IPS Fee is currently paid as part of the Ongoing Charges Figure (OCF) you pay on your commission-included funds. For example, if a fund has an OCF of 1.5%, a portion of this will be paid to Legal & General by the Fund Manager. 

You'll find more detail on the IPS Platform Charge you've paid in your future annual statement and in your online account information. 

The Platform Charge is an annual charge applied as a percentage of your total holdings on IPS and is deducted monthly. More information on how the Platform Charge is collected is given below. 

This is paid to us to cover our advisory services. This includes Nationwide’s Investment Committee, who regularly monitor Nationwide’s panel of investment funds and contact customers if a fund is no longer suitable. It also entitles you to talk to a Nationwide Financial Planning Manager for a financial review at your request.

The maximum Nationwide commission you pay will be 0.50% per investment fund. From 1 April 2016, where a fund's OCF includes commission over 0.50%, the excess will be rebated back to you in the same way as the IPS Fee. Please refer to the Fund Commission Charges Table.

The letter and the 'Breakdown of Charges' document you received only apply to your IPS Customer Reference shown in the letter. The new rules only apply to ISA and OEIC/Unit Trust holdings on IPS so any other products are unaffected. If you have multiple IPS accounts impacted by these changes, you'll receive a separate letter for each account. 

Customers who have invested before 31st December 2012 via a Nationwide Financial Planning Manager:

Rebates and tax

Rebates are refunds of charges paid to you from the costs of investing in a fund. From 1 April 2016 you will receive a rebate of your original IPS Fee and any Nationwide commission you would pay in a fund above 0.50%. Rebates from funds not held in an ISA are subject to income tax. Find out more about which funds you will get a rebate on.

You are receiving a rebate so that you don't pay twice for the IPS services or pay more than 0.50% commission per fund to Nationwide. 

You will be eligible to receive a rebate for as long as you continue to be invested in a fund where a rebate is applicable. 

Any rebates will be used to buy additional units in the largest fund you hold in a product (ISA or unit trust/OEIC). Your largest fund is the fund that has the highest value within each product.

Where you receive a rebate, Legal & General will initially hold the amount as cash in a 'Rebate Account'. On a monthly basis they will check if the value in the rebate account is £2.50 or more, and if it is they will invest any money due (with any relevant Income Tax removed, see below) into your largest fund in the product containing that rebated fund. 

ISA investors do not have to pay tax on a rebate. Rebates from funds in a Stocks and Shares ISA are free from Income Tax.

Any rebate you receive from a fund that's not held in an ISA is taxable as income. Legal & General pay the 20% basic rate tax for you before they pay you your unit rebates, so basic rate taxpayers have no further tax to pay. Higher-rate and additional-rate taxpayers may have an additional tax liability.

Tax treatment will depend on your individual circumstances and may change in the future. Non-taxpayers and individuals who qualify for the 10% starting tax rate on savings may be able to reclaim tax. More information and the relevant forms are available from your tax office or from the HM Revenue & Customs website.

Paying your IPS Platform Charge and the IPS Cash Account

The Platform Charge is taken from your IPS Cash Account on a monthly basis. The IPS Cash Account was set up when you first invested through IPS.

If there's not enough money in your IPS Cash Account, Legal & General will sell units from your largest fund and pay the proceeds into your IPS Cash Account in order to pay any charges due. This 'Sale for Regular Payment' instruction will be applied to your account in accordance with the procedures set out in your IPS Terms and Conditions.

If you wish to avoid Legal & General selling units from your investment, you need to ensure enough money is in your cash account to pay the charges. Please see 'How can I add money to my IPS Cash Account?' below for more on how to do this.

Legal & General set up an IPS Cash Account for you when you first invested through IPS. It allows you to manage the movement of cash into and out of your investments. You can use it to:

  • Manage the payment of your IPS Platform Charge
  • Keep your money when it's not invested in a fund
  • Pay for your investments
  • Receive money that you withdraw from your investments
  • Retain income paid out by income units

Your IPS Cash Account is not intended to be used for long-term cash holdings.

To help you keep track of your money, Legal & General have supplied you with a 'Platform Account Reference' that refers to your IPS Cash Account. You’ll need to quote this whenever you add money to your IPS Cash Account. You can find your reference on your last annual statement. 

There are four ways you can add money to your IPS Cash Account:

  • Current account or bank transfer

    You can add money from your current account into your IPS Cash Account electronically. For security, and to guard against money laundering, please verify your Nominated Bank Account with Legal & General first. It’s easy to do, simply call Legal & General Customer Services on 0345 272 00 89 (Monday to Friday 9am - 5.30pm – calls may be recorded). 

    Once Legal & General have verified your Nominated Bank Account, you’ll be able to make electronic payments using your Platform Account Reference as your payment reference. Send payments to:
    Sort code: 16-04-00
    Account: 31256358

  • Money from your investments

    If you choose to sell any of your investments, the proceeds of the sale will automatically be transferred to your IPS Cash Account. This money is then ready for investing at a later date or can be transferred to your Nominated Bank Account. 

  • Income from your investments

    Any income you receive from your investments will be held in your IPS Cash Account. This money will either be retained in your IPS Cash Account or paid into your Nominated Bank Account, depending on your instruction. 

  • By cheque
    You can send Legal & General a cheque with instructions telling them to add the money to your IPS Cash Account. Please make cheques payable to ‘Legal & General’ and include your name on the payee line (for example, ‘Legal & General – J Smith’). 

Interest will be paid at 0.25% below the base rate and is calculated at the beginning of each month on the money held in your IPS Cash Account. Find out more about Legal & General’s interest rates.

The funds you're invested in

No, the change of charging structure happens on 1 April 2016 and you'll stay in the funds you are invested in on 31 March 2016. 

Any existing regular investments you have will continue at the same amount and be paid into the same funds. 

Yes. You'll be able to buy new funds from the panel of commission-free funds that are available to you. You'll also be able to top up into any commission-free funds in which you're already invested. 

From 1 April 2016, you can continue holding commission-included funds until you make a further transaction on your account, such as a fund switch or add to your investment. Once you have made a transaction, all the commission-included funds you hold in that IPS record will be converted to their commission-free equivalent.

Please see www.onlineips.co.uk/investments/nbs_investment_charging for more information.

If you have a complaint about any part of Legal & General's service, or you'd like them to send you a copy of their internal complaint handling procedure, please contact Legal & General by telephone or in writing. Legal & General’s contact details are on the letter.

If you have a complaint about any part of Nationwide’s service, or you’d like us to send you a copy of our internal complaint handling procedure, please contact us.

If you are not satisfied with the way we have dealt with your complaint you may refer it to the Financial Ombudsman Service.  You can also refer your complaint to them first without giving us the opportunity to resolve it, but if you do this, they will only consider your complaint with our consent.

The Financial Ombudsman Service
Exchange Tower
London E14 9SR
Tel: 0800 023 4567 / 0300 123 9123

Making a complaint will not affect your right to take legal proceedings. We’ll tell you about your rights when we answer your complaint.