Calls on FCA to intervene on transfer times

Calls on FCA to intervene on transfer times

The FCA should reinforce industry measures to reduce transfer times between platforms, the head of proposition for FundsNetwork has said. 

Simon Farrant said although great strides had been made to reduce transfer times between platforms, there were still too many issues with legacy platforms and with non-platform providers whose clients wished to switch onto a platform.

The former financial adviser said this was particularly a problem for pension clients, whose transfer requests onto platforms could take more than a month, depending on the level of technological integration.

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For example, Mr Farrant said while Fidelity can transfer pensions via Origo Options in a matter of a few days, transfers for pension schemes who are not members, 40 days may be required. This makes all the difference to the end consumer, he said.

He explained: "Since mandatory re-registration support for re-registration of assets was introduced by the Retail Distribution Review in 2012, transfer times between platforms have reduced substantially for all types of tax wrappers.

"But a good customer experience post these changes is largely determined by whether the ceding and receiving provider have signed up to a service, such as Tex or Origo Options."

Cynically, he was concerned many businesses which have not integrated had no commercial case to do so, which meant more work needed to be done to extend service levels across the industry and improve turnaround times for consumers. 

In July this year, the Transfer and Re-registration Working Group - a group of 10 trade bodies - published a framework on pension switching, which proposed a 14-day maximum limit for cash transactions and 15 days for occupational scheme transfers.

While this is welcomed, Mr Farrant expressed a belief the regulator should play a greater part in encouraging such industry initiatives.

"As the Trig work is further established we think it would be helpful for the FCA to put pressure on all related businesses to agree and sign-up to a pension and investment switch guarantee similar to the initiative that has been adopted for retail bank accounts," he said. 

According to Mr Farrant, the scope of any initiative should not be purely platform-to-platform transfers as it is understood some of the longest delays occur when customers are switching assets onto a platform from non-platform providers.

Ian McKenna, founder of FTRC, commented: "This is probably best address by the FCA providing further clarity as to expectations in this context under Treating Customers Fairly.

"In the case of platform and non-platform, business substantial delays usually occur when the ceding provider has a closed book."

He agreed there would be "significant consumer benefits" if the FCA were to press for much higher standards from closed book providers who otherwise - as Mr Farrant suggested - have no incentive to make the investments necessary to improve transfer times. 

Mr McKenna added: "As far as occupational transfers are concerned this is really an issue for the Pension Regulator, not the FCA and consumers definitely deserve better service than they receive from many occupational schemes, where some trustees are notoriously lax at investing in the technology necessary to meet professional standards.