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23 Jan, 2008

IFAs say CGT changes will bring bond market to a standstill

Around 66 per cent of advisers say that capital gains tax changes announced in the pre-Budget report will lead to a sharp fall in new investment bond business or could even halt sales completely.
A survey by CWC Research found that 66 per cent of advisers said they would very rarely recommend investment bonds if the proposed changes to capital gains tax go through.

The research, conducted in association with BNP Paribas Securities Services, found that only a third of advisers questioned could see a future for bonds.

CWC Research senior partner Clive Waller says: "Bonds have been the staple adviser investment product for many years now. However, the move to open architecture, full transparency and fee-based remuneration has resulted in more advisers recommending unit trusts.

"TCF and RDR proposals look to accelerate the process. A change in CGT, putting bonds at a clear disadvantage to unit trusts and OEICs, could result in bonds becoming niche products.

"These results show how polarised the market is regarding investment bonds. If the CGT changes do become law, the industry will need to present a unified argument to advisers and customers, indicating exactly when bonds are appropriate advice."

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