Now that re-registration of funds between platforms in a timely manner is mandatory and the industry has come together for the common good of the customer, advisers may well be wondering what has happened to automated re-registration.
Is it all just a myth? Well, I thought it might be insightful for advisers if I explain exactly what is coming and why it’s taking the industry so long to get there.
All the major platforms, fund managers and third-party administrators have indeed joined together, via the Tax Incentivised Savings Association (Tisa), with the common goal of improving the re-registration process for the benefit of advisers and their clients.
Working parties, committees, service level agreements (SLAs) and ultimately the Tisa contract club were all established with full and active participation from all parties.
The industry jointly selected the technology to be used for electronic messaging (swift), the process and SLA – which dictated that the re-registration of funds from one platform to another should take between five and 11 days (depending on complexity) – and the legal structure (the Tisa Exchange Limited contract club).
The end result is an automated solution behind the scenes – from one provider to another – that will see re-registration times that, at present, can take many weeks, reduced to fewer than 12 days, a significant improvement.
Skandia is one of the first providers to have successfully completed the development of their back-end technology to facilitate electronic registration between providers via Origo.
The problem, however, is that until the bulk of other providers are ready to adopt the re-registration technology, the process will remain manual in most cases.
A couple of other key players are due to go live soon, but in reality it could be many more months before the majority are up and running. Without more parties connected to the technology, it will not be fully effective.
Automated re-registration is, without doubt, the best customer solution, but until the industry is in a position to fully utilise it, customers and their advisers may prefer to use the cash transfer process for Isas. This involves selling the underlying investments and transferring the cash to the new platform rather than moving the actual holding (in-specie re-registration).
Cash transfer will typically take one to two weeks to complete, compared to several weeks for manual in-specie re-registration.
But due to the possible capital gains tax implication, cash transfers may not be appropriate for unwrapped investments, so in these cases in-specie re-registration may still be the most appropriate route.
In summary, a new automated re-registration process is not a myth; it is a reality. Skandia is ready and more big providers are following. However, until significantly more providers install the technology, the full benefits of the system will not be realised.
Peter Mann is managing director UK for Skandia
