Investors have been paying over a fifth less in annual fund fees as a result of the Retail Distribution Review, a study found, as the sunset clause took effect last week.

Trail commission must be discontinued on all retail funds in the UK as a result of the reforms.

Switching off trail commission is the final stage of complying with the FCA’s requirement that all retail fund investors should be moved entirely into unbundled, ‘clean’ share classes that only include the charges paid to fund managers.

The analysis by rplan.co.uk, the online investment platform, in the lead up to the implementation date of 6 April, showed the average annual fee for the top 100 funds purchased on rplan has fallen from 1.32% around the time that RDR was introduced, to 1.03% now, representing a fall of 22%.

The company reported that the average fee of the top 50 has fallen from 1.24% to 1.03% (17%) and that of the top 10 has fallen from 1.18% to 1.10%, or 7%.

Changing investment patterns have also been a factor. In Q1 2013, 10% of the top 100 investments on rplan were in passive funds but this has risen to 26% in 2016.

Nick Curry, rplan director, said: “The greater transparency brought about by the RDR has certainly been a factor in fees being more competitive.

“As much as fees have come down, investors still need to be aware of advisers or platforms charges – research we commissioned shows these can vary by a factor of three for portfolios of £30,000 alone.

“Platforms do target investors with different amounts to invest through their charging structure, and this does go some way towards explain varying levels of charges, but there is no doubt that lack of clarity also plays a role.”

Changes should be expressed in both percentage terms and pounds and pence, he added.

Rplan said it discontinued trail commission charged on its customers’ funds seven months ahead of the sunset clause deadline. 

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