Platform re-registration is coming under renewed scrutiny as the FCA raises concerns consumers may be losing out due to slow transfer times.
But experts warn attempts to speed up transfers could be thwarted by inconsistent data and costly system upgrades.
FundWeb sister publication Money Marketing understands the FCA is in early-stage discussions with the industry after a data request brought inconsistencies to light.
In February, the regulator asked platforms for information on how long they take to re-register Isas and Sipps. The data showed significant differences between firms, and average timescales longer than those quoted by the industry.
The regulator has begun discussions with Tisa and other stakeholders on what is behind the discrepancies, and how to improve times and outcomes for customers.
Nucleus chief executive David Ferguson says: “If a transfer is supposed to take a few days and ends up taking two weeks, the customer is stuck in limbo. The market is moving but they cannot trade, which could lead to an investment loss.
“Consumers could also lose out if it takes longer than it should to move to a lower-charging platform.”
The Lyncombe Consultancy managing director and former Tisa policy director Malcolm Small says: “Nobody wants transfers to take any longer than they need to. In volatile markets, the potential for consumer detriment is quite large.
“A lot of work has been done to bring down re-reg times over the past few years, particularly for Isas, but there is still a long way to go on pension transfers.
“The FCA is right to express concerns and keep the feet of the industry to the fire.”
Transfer times can range from minutes to a month, depending on the process used by the platforms and product providers involved, and the type of assets being transferred.
Most providers are signed up to an electronic transfer system such as the Tisa Exchange, or Origo Options for pension transfers.
But certain firms use manual processes for some or all transfers, which slows the process down significantly as it relies on sending documents via post.
There is also a difference between those who use an electronic process to send messages between providers but then deal with the information manually when they receive it, compared to those which complete the transfer without human interaction.
Transact chief executive Ian Taylor says: “Where we, the counterparty and the asset are all enabled via straight-through processing electronic re-reg, the whole process can be completed almost instantaneously.
“Otherwise, we always complete our steps of the process within 24 hours of receipt, but the duration of other steps will depend on other parties.”
FundsNetwork says it uses automated processes and when working with other automated providers completes transfers for Isas and general investment accounts in an average of five working days. When working with manual providers, however, this increases to 21 working days.
Issues can also be caused by minor errors in automated systems.
The Lang Cat principal Mark Polson says: “Very simple things like the date being in the wrong format, or an extra zero after a decimal place can cause problems with an electronic system because there is no human looking at it to apply common sense.
“It also depends what assets you are transferring. Life companies have a lot of weird, complicated old plans which can be horrific to transfer.”
Apples and pears
Another major issue is the lack of consistent data.
Money Marketing asked 17 platforms for their average re-reg times for platform-to-platform transfers over the past six months, for Isas, Sipps and personal pensions.
Only FundsNetwork, Zurich, Old Mutual Wealth, Standard Life and True Potential provided any figures, none of which were in a consistent format.
Tisa says there is no data available on average transfer times, as providers all measure times differently.
Tisa chief operations officer Carol Knight says: “It all depends when you start and stop the clock ticking, and people’s interpretations of that vary wildly so you are comparing apples and pears.”
For instance, she says the process could begin when the client gives instructions to transfer, when the form is sent to the provider, or when the provider receives it.
Knight says without a consistent basis for measuring the data, it is impossible to know the scale of the problem or what should be done about it.
She adds: “There is a huge difference between Isas and Sipps bec-ause of the types of investment that can be held within them, so it is not particularly helpful to put them together.”
Origo head of commercial marketing Richard Clark says: “The available data on re-reg is patchy.
“Times are very dependent on the types of investment being transferred, so we need to ensure we are comparing like for like.”
Taylor says the FCA needs to exp-and its work to encompass providers as well as platforms.
He says: “Transfers involve all sorts of different elements, and platforms are only part of the chain.
“The promised land of instant re-reg of all assets in all wrappers will only happen when all platforms, fund managers, life companies, and connected parties are operating straight through processing electronic re-reg.”
But Knight warns this risks adding further costs for consumers.
She says: “Fully integrated systems are a huge investment and we do not want to see consumer costs going up. There is a balance to be struck between optimum times and optimum costs for the consumer.”
How platforms compare on re-reg times
True Potential: Average electronic re-reg time over the past six months for all platform-to-platform transfers is 10 business days. This compares with 12 business days in the same period last year.
FundsNetwork: Average re-reg time for personal pensions and Sipps over the past six months is eight working days when done via Origo, and 26 working days manually. This compares with eight and 33 days respectively in the previous six months. For Isas and GIAs, the average platform-to-platform transfer time over the past year is five working days to transfer in and six working days to transfer out, when done on an automated basis. On a manual basis, it takes 21 working days to transfer in and five working days to transfer out.
Zurich: Average re-reg time for all transfers is six working days over the past six months compared with 14 working days in the same period last year. Zurich says this year’s figure is lower as a result of it signing up to Origo.
Old Mutual Wealth: Average re-reg time for the past six months, if end-to-end automated, is nine working days. When dealing with a manual provider, this increases to 21 working days. Overall, the average re-reg time over the past six months is nine working days compared with 12 days in the same period last year.
Standard Life: Once the transfer has been released by Standard Life, the average Isa re-reg is completed in seven days. For Sipps, Standard Life issues re-reg documents to the receiving provider within 10 days.
Platforms that declined to provide data: Aegon, Axa Elevate, AJ Bell, Cofunds, Novia, Nucleus, Parmenion, Transact, Ascentric, Aviva, 7IM, Hargreaves Lansdown
Expert view: We don’t know how big the problem is
We know the FCA is looking at transfer times and we fully support that because there are some very slow times and it is an issue.
Tisa does not publish any data on transfer times because it is very difficult to obtain accurate figures. It all comes down to when you start and stop the clock ticking; interpretations of that vary wildly, which means you end up comparing apples and pears.
For instance, does the clock start when the adviser takes the signed form from the client, when the adviser has checked the form is complete, when the form is sent to the provider, or when they receive it? There are so many potential starting points.
Equally, is the transfer deemed to be complete when the Isa wrapper is transferred, or when the first or last investment has been re-registered?
Our discussions with the regulator are at a very early stage. We need to know what the FCA’s data is based on, what its concerns are and where it would like to get to.
We would all like to achieve faster transfer times and a good result for the consumer, but we do not know what the optimum transfer time is at the moment or even how big the problem is. Once we have agreed what good looks like, we can see how the industry is performing.
The fundamental difference in speed is the difference between electronic and paper processes. As soon as you start to rely on Royal Mail, you are adding days to the process.
But the electronic message itself between providers is not the full answer. The real-time saving comes when a platform has a fully automated internal system rather than processing the information manually once it has received an electronic message.
To invest in fully integrated systems is hugely expensive, however. We do not want to see consumer costs going up, so there is a balance to be struck between optimum times and optimum costs for the consumer. At first glance improving transfer times looks very simple, but when you look at the practicalities it is nothing like simple.
Carol Knight is chief operations officer at Tisa