Platforms are adopting different approaches when it comes to re-registering away from preferential fund deals, raising concerns about whether platforms are creating unnecessary obstacles for clients that want to leave.
The FCA has recently raised concerns that platforms are still falling short of expectations on efficient re-reg of assets. Meanwhile advisers have told Money Marketing the process can still be clunky, particularly where funds are held in preferential share classes.
In November, Tisa proposed that the ceding platform should convert any preferential shares to the standard retail share class and then re-reg the assets to the receiving platform.
That process will be formally set out by the end of March with platforms invited to adopt the procedure.
The Lang Cat principal Mark Polson agrees with the Tisa approach and dismisses arguments that it is too complex for the ceding platform to hold both a preferential share class and standard share class of the same fund.
He says: “It is perfectly feasible to hold the standard retail share class alongside the preferential share class, particularly where the fund is run by the same company.
“I do not believe it should result in increased costs for clients. Otherwise each time the platform announces they have agreed terms with a fund group they are saying they are adding cost.”
Fidelity head of advisory services Jon Everill says it is not practical to convert on the platform and then re-reg across to another platform. He says: “This is not an issue which is isolated to Fidelity. It effects any preferential share class in the market today. Re-reg as a process is a unit-to-unit transfer effectively. If the same units in the same fund are not available in the same share class on the platform you want to move to you cannot re-reg.
“That does not mean you cannot transfer, but it is a slightly different process that means you have to encash. There are some potential [CGT] implications in certain cases.”
“Or the client can do something else, which might not be ideal, they can switch into a fund within FundsNetwork that is also available on the new ceding platform and they could then re-reg.”
Similarly, Hargreaves Lansdown recently announced a set of preferential deals with a group of fund houses as part of its Wealth 150+ list.
Hargreaves’ head of financial planning Danny Cox says the Vantage platform will transfer as cash if the receiving platform does not have access to the preferential share class.
He says: “We will transfer as stock, but if the other platform cannot hold the share class, we will need an instruction whether to cash in and transfer as cash, or to keep the holding.”
Rival platforms have criticised this approach as going against treating customers fairly principles.
Novia chief executive Bill Vasilieff says: “Some of the platforms forget whose money it is. It is the clients money. Any blockage to exit is a retrograde step but the fact that some are trying to block re-reg is no surprise because they have been doing it for years.”
In November, Money Marketing reported advisers were experiencing delays when trying to re-reg clients away from the discounted Standard Life Investments fund range.
Standard Life, which announced further preferential fund deals this week, has automated the re-reg process along the lines suggested by Tisa.
Standard Life head of platform propositions David Tiller says: “We have created a simple re-reg process for the discounted funds on our platform, automatically converting them to standard clean funds prior to re-reg without the need for any adviser input and with no CGT liability. Using the standard clean share class as the common currency between platforms is a simple and pragmatic way of enabling re-reg that adds little time to the process.”