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The waiting game

Why does the unit trust industry manage to transfer funds in five working days almost without fail, while insurers choose to stall annuity transfers for as long as five months with blatant disregard for their customers?

And why does the FSA turn a blind eye?

New research from Partnership Assurance, commissioned by Hargreaves Lansdown, shows the average time taken to transfer a customer’s pension pot to their chosen annuity provider shockingly increased last year to 30 working days, up from 22 in 2007.

This is despite the Association of British Insurers’ initiative to speed up transfers.

Partnership analysed 7,500 of its cases over four years and found Windsor Life’s customers were suffering the most. The firm made them wait on average 99 working days for their funds to be transferred last year – a threefold increase from 33 days in 2007.

Lincoln Financial Group was the second worst provider on the list of almost 50 firms, taking an average of 73 working days to transfer funds, up from 35 days the previous year.

NatWest took an average of 59 days, while HSBC took 57 days compared with 19 days in 2007 and Pearl Assurance forced customers to wait 49 days compared with 34 days the previous year.

Aegon took 40 days on average to transfer money, despite being at the forefront of the Options initiative.

Meanwhile, Axa, Friends Provident, Legal & General, Prudential, Scottish Life and Scottish Widows all took 30 working days or longer to get the money across, according to the research.

Some of these providers expressed surprise at Partnership’s findings, claiming they did not square with their own figures.

Windsor Life claims its average transfer time is in fact 7 days. While a Lincoln spokeswoman says: “We take treating customers fairly very seriously and are confident we are meeting this responsibility.”

But Partnership insists the data directly reflects its experience with these companies.

According to the ABI, Options is helping to improve the situation.

Spokesman Jon French says: “Options has got off to a great start and we need to build on that success.

“We want all relevant companies using the system and urge any who are not to start as soon as possible.”

But Hargreaves Lansdown pensions analyst Nigel Callaghan says the initiative is “too little, too late”. He believes it is time for the FSA to show some teeth.

He says: “Insurers have shown they are not prepared to police themselves. The FSA needs to force minimum standards and to give investors an automatic right of redress in the event of non-compliance.

“These companies are taking a commercial decision to eke a little more profit out of their loyal customers. They are earning an AMC for every day they stall the transfer. This flies in the face of treating customers fairly, smacks of commercial cynicism and simply cannot continue.”

What is your view? Have you had similar experiences where transfers take months? Should the FSA roll up its sleeves? To comment, click on the link below.

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Comments

There are 8 comments at the moment, we would love to hear your opinion too.

  1. Owen Wintersgill 11th June 2009 at 5:07 pm

    Annuity delays
    Whilst the Options initiative is welcome, there are still many more steps which could be taken to ensure customers are treated fairly. Firstly, all payments should be made by Telegraphic Transfer which avoids the delays from clearing via a cheque or BACs. Secondly, if a client misses a guarantee period from an annuity provider because of ceding scheme delays and they lose out, they should automatically be compensated by the pension company so that they are not disadvantaged. Tough regulations is the only language these companies understand- particularly with companies closed to new business where they have no incentive to do anything other than make as much as they can for as little service as possible.

  2. The Waiting Game
    OK, time for a statement of the blindingly obvious. It takes an eternity to transfer pension funds because the companies regard a transfer as non productive business and allocate a disproportionately small element of their resources to this task. Thus if you owe the providers money you may hear the screetch of brakes outside your door at midnight; however if you are trying to get providers to transfer funds out then you need first of all to get the clerk in the company who deals with Transfers (England) and wait. And of course the forms, the forms……

    Cannot understand why unit trusts, ISAs etc don’t take as long-is this really the case? If so keep it quiet. If the unit trust etc providers ever find out….

  3. pension transfers
    Wyndsor Life and 7 days – 7 months more like. If Standard Life can do everything via one telephone call (that is for an internal annuity) and no forms why can’t everybody else? If it is that easy for an internal process it can’t be that much more difficult for an external transfer. Standard Life does for once deserve credit where credit is due. This week, within 30 mins, under the triviality rules, closure and payment of fund was agreed and set up, with an expectation of the sum being in the client’s account by Friday.

  4. The Waiting Game…
    If my company took this long to deal with these matters, I have little doubt that the Ombudsman would find against me and I’d be compensating someone. The FSA would probably be on my back too.

    They should be doing the same with insurers. My experience of large financial firms is they only act quickly if there’s a VERY large chunk of business about to go someone else’s way instead of theirs, or if they’re going to have bad publicity.

    With computerised systems there isn’t any good reason why a return of mail service can’t be available.

    I recently had to threaten Friends’ Provident with a compensation claim to get them to deal with my transfer even half quickly.

    This state of affairs isn’t satisfactory!

  5. NPI are the worst provider, by far…
    NPI are the worst provider, by far, to complete an external transfer in my experience. Current case is close to 8 months now – they’ve lost several important documents internally and just have the worst administration of any provider not to mention their attitude of indifference.

    Partnership should count their lucky stars they haven’t had dealings with this company during their four year survey!

  6. The waiting game
    As usual, the FSA is allocating its (our) resources to all the things least justifiable (such as £20m in bonuses) or in need of attention, such as its rubbish TCF initiative and the RDR, whilst overlooking the really big, glaringly urgent issues such as the need to force insurers to speed up the release of OMO pension funds and (it hardly need be said yet again, but I will anyway)………THE BANKS!!

  7. If one insurer can get it right why can’t others
    I would re-iterate what Chris Marsham has said about Std Life’s annuity efficiency and poss the question ehaded above. In the reverse, we have just been fobbed off after a complaint to NU over a transfer where they decided THEY, not the reciving insurer had to have ID from what was already their customer. This was not asked for from them for several weeks and when they did they wrote asking for it and we sent it by return (Fax) the day we received the request, however, despite being told there was NO MVA, NU “revalued” the S32 DOWN compared to the original transfer figures the day BEFORE we received the letter asking for ID. We’ve complained and the only course of action now is for the client to consider eitehr the FOS or direct to the courts for breach of a duty of care and my preference would be the latter as it is a clear breach for my mind as the client has suffered a loss becuase they delayed and couldn’t be arsed to pick up the phone.

  8. The Waiting Game
    Whilst getting discusting long delay from Windsor Life they accepted money from a Scottish Life transfer destined for NML/ LV/ Tommorrow. despite compalints to the authorities nothing was done but my clients received £200 compensation for delays. Getting it right fast first time must be the cost effective ways for all companies. There is a good system use it dont hide behind the ABI.

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