Re: The EBS Mystery deepens
Thanks for those links, <!--EZCODE ITALIC START-->
Boss<!--EZCODE ITALIC END-->.
If EBS have a choice of Gross/Net for new customers, I'll eat my scarf.
How do I explain CM's brochure and the EBS' website?
All I can think of is that before everything went Gross on January this year this would have been a valid choice.
It remains a valid choice for people who are in existing Net funds especially as EBS have no exit/entry charges. It is a very real question for such clients whether to switch. But I repeat that the option <!--EZCODE BOLD START-->
does not exist for new customers<!--EZCODE BOLD END-->. I would ring EBS myself but as a bear my telephone technique is not the best.
<!--EZCODE BOLD START-->
The Issue of Net Management Charges<!--EZCODE BOLD END-->
Read your comments, <!--EZCODE ITALIC START-->
Boss<!--EZCODE ITALIC END-->. Nearly agree with all that, but just a little clarification <!--EZCODE ITALIC START-->
(the following carries a Government Empey Warning:lol ).<!--EZCODE ITALIC END-->
Under the old Net regime there was in fact no difference in the <!--EZCODE BOLD START-->
actual<!--EZCODE BOLD END--> taxation <!--EZCODE BOLD START-->
payable to Revenue<!--EZCODE BOLD END--> of customers of Unit Trusts <!--EZCODE ITALIC START-->
(like EBS Summit Funds)<!--EZCODE ITALIC END--> and life funds. But there was a difference in what they respectively <!--EZCODE BOLD START-->
deducted<!--EZCODE BOLD END--> from the funds under the <!--EZCODE BOLD START-->
guise<!--EZCODE BOLD END--> of taxation. Let me try and explain.
The actual taxation <!--EZCODE BOLD START-->
payable<!--EZCODE BOLD END--> to Revenue in each case was standard rate times the "income <!--EZCODE BOLD START-->
less<!--EZCODE BOLD END--> management charges". Unit Trusts, being regulated by the Central Bank, were only allowed to charge customers the tax that they actually had to pay over to Revenue <!--EZCODE ITALIC START-->
(eminently reasonable don't you think)<!--EZCODE ITALIC END-->.
Life companies on the other hand developed the practice of deducting tax on <!--EZCODE BOLD START-->
ALL<!--EZCODE BOLD END--> the investment income in the fund and keeping the relief on the management charge for themselves. Every life company did it this way even QLD.>:
In these circumstances EBS were quite right to net down their management charge so that one was comparing like with like.
<!--EZCODE BOLD START-->
BUT<!--EZCODE BOLD END--> everything is now levelled up. There is no longer a distinction between a 1.4% management charge as levied by EBS Summit Fund and the same charge as levied by a life company. Implicitly the customers enjoy 23% relief in either case through the exit tax mechanism.
I note that with their latest offering the EBS are still using this "netting" device even though it is no longer relevant and is indeed now quite misleading as a life company with the exact same charge would describe it as 1.4% whilst EBS are describing it as 1.1% - I presume it's the same crass inefficiency which has them still labouring under the illusion that their Net funds are still open to new business.:|