InvestmentsDec 6 2016

UK trade bodies unite over slow pension transfers

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UK trade bodies unite over slow pension transfers

A consultation paper published yesterday (5 December) following a review process, detailed proposals which relate to both transfers and de-registrations of retail financial products.

It covered a broad range of tax wrappers and those asset types which are held in these wrappers.

The work has been undertaken by the industry, and in consultation with the Financial Conduct Authority, the Department for Work and Pensions and The Pensions Regulator.

The eight trade associations involved are the Association of British Insurers, the Association of Member Directed Pension Schemes, the Association of Professional Financial Advisers, the British Bankers’ Association, the Investment Association, the Tax Incentivised Savings Association, the UK Platform Group and the Wealth Management Association.

Feedback on these proposals is sought by 31 January 2017, with a final set of recommendations due to be published in Spring 2017.

The first of the five proposals designed to improve the transfers and re-registration process is the creation of clear service expectations for transfers and re-registrations, including a 48 hour standard for completing each step in the process.

The second is the collection of high level management information and a common reporting methodology for all transfers and re-registration instructions.

The third is the creation of a forum to identify, prioritise and implement solutions that resolve unnecessary barriers to transfer and re-registration processes.

The fourth is the development of common industry standards and good practice guidelines for the retail investment and pensions industry;

The final proposal is the establishment of an independent governance and oversight body to oversee the implementation of the final proposals.

A detailed analysis of the current processes has been undertaken and sought views from the industry, conducting primary research to understand the views of consumers.

Analysis highlighted there was generally a high level of consumer satisfaction significantly, by provider, by wrapper and by asset type.

It also identified scope to improve firms’ accountability for delivering good customer outcomes within some transfer and re-registration processes.

Chair of the group, Ed Dymott, head of business development at Fidelity International, said enabling consumers to shop around and move between providers is fundamental to any competitive market.

"For pensions and investments, this means customers need to be able to consolidate or move their assets between different providers efficiently and with clarity at all stages. This review recognises that this is a highly complex area, with a broad range of different products and participants involved in the transfer process.

"There is some good market practice already in existence that can be built on, however we also recognise there are parts of the market where improvements can be made.

"We believe the five proposals under consultation can provide the framework for improving client outcomes for transfers.”

Data collected by Hargreaves Lansdown below shows the extent of problem faced by investors. Each pension provider had completed at least 20 transfers to Hargreaves Lansdown. 

The Best

Company

Type

Average days to complete transfer

Supports Electronic transfers

A

Insurance company

4.33

Yes

B

Wealth Manager

5.94

Yes

C

Insurance company

7.07

Yes

D

Insurance company

7.43

Yes

E

Insurance company

7.53

Yes

F

Insurance company

7.71

Yes

G

Insurance company

8.19

Yes

H

Bank

8.38

Yes

I

Insurance company

8.68

Yes

J

Insurance company

8.83

Yes

The Worst

Company

Type

Average days to complete transfer

Supports Electronic transfers

Q

Benefits consultancy

34.97

No

R

Pension administrator

35.13

No

S

Benefits consultancy

35.21

No

T

Pension administrator

36.23

No

U

Benefits consultancy

39.43

No

V

Master Trust

42.03

No

W

Benefits consultancy

42.72

No

X

Benefits consultancy

44.03

No

Y

Pension scheme

45.88

No

Z

Benefits consultancy

53.37

No

Tom McPhail, head of retirement policy, said: “Moving pensions and investments around between companies can still be a lottery for investors. Some companies have invested in delivering efficient and predictable service for their customers but others are still bedevilled by turgid, unpredictable and bureaucratic systems.

"It takes two to tango and it doesn’t matter how good one company’s systems and customer service is, if the counterparty in a transfer transaction is dragging their feet or operating poorly. So it makes sense to address this issue on a collaborative, collective endeavour basis; there is a commitment across the industry trade bodies and organisations involved in this consultation to raise standards across the board.”

Carol Knight, chief operations officer at the Tax Incentivised Savings Assocation said enabling customers to transfer assets quickly and efficiently is a long-held belief of Tisa.

"That’s why we established TISA Exchange (TeX) to help facilitate the electronic transfer of wrappers and assets between platforms and providers. We have also been instrumental in helping to bring Cash Isa transfer times down.

“We know that the FCA is taking a keen interest and, as with TeX, would like to see the industry develop solutions itself that improve the transfer and re-registration times for pension as well as investment assets."

Robert Lewis, director of operations at Flintshire-based Heritage Financial Solutions said: "This is a great point and something that frustrates us as an IFA on a day to day basis. The comments and research I believe hits the nail on the head.

"Some providers are very good in transferring money in a timely fashion, but there are some providers (in our experience small SIPP providers) who can take months to transfer funds, meaning clients can spend longer in the wrong assets. Is this really treating customers fairly?

"I believe there should be a guarantee just like the current account switching service, seven days would be fantastic, but not sure how realistic that is and how easy it would be to implement, great target though."

ruth.gillbe@ft.com