A number of advisers have complained they have been caught on the back foot by a move by the CFS FirstChoice platform to close its FirstRate Saver (cash) portfolio as well as the FirstRate Term deposit products.
The advisers have complained that they were only notified of the move by CFS on Tuesday and that the products will close on 14th and 29th May, respectively effectively giving them around five weeks to switch their clients from what have represented fee-free products.
The products affected FirstChoice FirstRate Term Deposits and FirstRate Saver account-based products which will close on 14 and 28 May, respectively and the FirstWrap FirstRate Wholesale Saver option which will close on 28 May.
In an e-mail to advisers, CFS attributed the move in part to the need to prepare to separate from the Commonwealth Bank stating that “as a result of the different structures that exist between investment products, and the current interest rate market conditions, we are unable to continue to offer certain cash investment options”.
Confirming the move, a spokesman for CFS said it regularly conducted reviews of its products to respond to member expectations and changes in the external environment.
“We will be contacting members who are impacted by these changes over coming weeks. We are committed to improving member services and expanding investment offerings to provide members with greater choice and value,” he said.
In its e-mail to advisers, the company emphasised that the options would continue to be offered its superannuation and pension products.
However, a number of advisers have claimed that the move will see some clients moved from a fee-free area to the FS Strategic Cash fund which entailed an ongoing management fee of 0.41% which was reduced to 0.29%.
Advisers were only notified of this by email on 6 April, 2021 – so only have 5 weeks notice to switch clients from the fee-free FirstRate Saver cash account to the FS Strategic Cash fund.
However, CFS has stated that investors holding term deposits on termination will be paid their full interest to maturity entitlement and that the proceeds from their term deposit(s) can be invested in other FirstChoice investment menu options as instructed by investors and/or their advisers.
It said investors holding FirstRate Saver balances will receive the full interest entitlement to the final date they hold the investment option with balances paid out to investors.