Even by the platform market’s standards, the past 12 months has put the cat among the pigeons. If previous years were defined by high-profile consolidations and the potential disruption caused by low-cost, direct-to-consumer offerings from the likes of Vanguard, 2018 is likely to be etched in the memories of many as the year of replatforming woes.
There is plenty more going on in the background too, with the FCA’s final platform market study report due next year, an ongoing ramping up of flotation activity, plus signs of a revival in the acquisitions space.
Aegon and Aviva in particular will be glad to see the back of recent months, as both have experienced severe and expensive migration issues.
Aviva finally started replatforming in January after a number of delays, and what followed were months of glitches and crashes. Douglas Boyce, chief executive of the platform’s technology provider, FNZ, left his job in May. In June, it was estimated that 20 customers had taken cases to the Financial Ombudsman Service.
In light of Aviva’s struggles, Aegon moved to reassure clients it was determined not to suffer the same fate as its rival, making the point that it was embarking on a technology upgrade of the former Cofunds service as opposed to a traditional replatforming. But this confidence was quickly found to be misplaced. A number problems surfaced in June, with some customers being locked out of their accounts for as long as a month.
The company’s half-year figures, published in August, revealed that rectifying these issues had cost £3m in June alone, with this expected to rise before the year-end. This has also resulted in problems for intermediaries.
Scott Gallacher, financial adviser at Rowley Turton, told Money Management in August that his company had since amended recommendations in favour of other platforms, and that technological blips were not the only problem.
He said: “Aegon and Cofunds’ one-year migration project didn’t give the document store any weight at all, even though we raised this issue with Cofunds some months before the replatforming commenced.
“Under the old system, one page on the document store showed all clients that had received correspondence from Cofunds and needed looking at. This is the equivalent of a post tray, and is essential for advisers to see what correspondence is being issued to which clients and proactively monitor and deal with any issues that might arise.”
The fallout has been such that many advisers are now fundamentally reconsidering the way they approach their relationship with platform providers.
Meanwhile, other companies will be paying attention to the lessons learnt in a bid to ensure they, and ultimately their clients, avoid suffering the same fate.
While some upgrades have gone through already, Andy Bell, chief executive at AJ Bell, notes that further migrations are on the horizon. “The platform market has reached a stage of maturity where many technology systems need upgrading and consolidation of providers has started to happen,” he says.
“The inevitable transfer of clients on to new technology platforms is leading to a significant level of disruption at some platforms, which may be the catalyst for advisers to decide to move blocks of clients to a better value and more suitable platform for their needs.”