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Platform Transfers – “Progress has been pitiful”

There is a very good article in this week’s Investors Chronicle by Mary McDougall on the subject of platform transfers. I have sent her the following email:

Mary,

On the subject of platform transfers, you are quite right to say that “It appears progress has been pitiful”. I have done several such transfers in the past and none has been completed in under 3 months. The FCA initiatives to improve matters has had minimal impact. I am currently still trying to get one completed that I initiated on the 12th of January.

This is a transfer of a SIPP from one platform to another where I already held a SIPP. This was an “in-specie” transfer but it only contained holdings of cash and UK listed Crest shares. No funds or other problematic assets. In other words it should have been absolutely straightforward. But it still required paper forms to be completed and signed. They suggested it would take 12 weeks but I think it will take longer.

The latest hold up is that as I passed the age of 75 in the middle of this transaction the sending platform requires completion of a Lifetime Allowance Test which is also being done by the receiving platform. I am querying why they both need to do it and why that should be holding up completion.

What is really annoying is that both platforms seem to be understaffed to handle transfers, and seem to expect me to do all the chasing required to get the transfers completed. As I have pointed out to them, the FCA Handbook says the brokers “must execute the client’s request within a reasonable time and in an efficient manner”. They are clearly in breach of that rule.

In the meantime, my cash and holdings have been frozen, prejudicing my investment activities.

It is simply unacceptable for transfers to take months. It’s anti-competitive as it deters people from moving to platforms with lower costs or a better service. The FCA cannot fix this problem by exhortation. It needs to look at the wider issue of poor systems and under resourcing of transfers. And it needs to get a lot tougher with the platform industry.

Note that I have not named the two brokers concerned in my latest transfer as I don’t think they are likely to be any worse than others from my past experience. It is an industry wide problem, and needs tackling more vigorously.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

7 Comments
  1. Michael Byrne says:

    Currently trying to transfer shares to a charity from Hargreaves Lansdown. They simply won’t allow it – no way to do it without hitting a significant CGT liability.

  2. Roger Lawson says:

    The easiest way would be to ask them to “rematerlialise” the shares into certificated form if they are direct holdings and then do the transfer yourself. But if they are in an ISA, that might be difficult.

    • Michael Byrne says:

      Yep – tried that. Hargreaves Lansdown suspended issuing paper certificates a year ago (because of Covid) and are still not doing it…..

      • Roger Lawson says:

        Well that would be a good reason to fire them and transfer to another broker as I did long ago for other reasons. They pride themselves on their service to customers but not allowing rematerialisation is plain daft.

        • Michael Byrne says:

          And that’s why I moved my SIPP and ISA to II (after several tortuous months)….. Now need to move the stuff that wasn’t in either.

  3. Colm Maguire says:

    Following Roger Lawson’s post earlier, I also wrote to Mary McDougall as below

    I liked your article on platform switching and heartily agree with what you say. I have just read Roger Lawson’s note to you and so am posting this on Sharesoc as well.

    In “How to help smooth the process” the fourth paragraph should be in bold with orange and green lights. I have transferred my SIPP twice in the last two years so I know!! Checking that the funds you have are available to hold in the new platform is so important.

    My most recent transfer started end January 2021 and completed two weeks ago, so about 5 weeks in total. But I first asked if all the holdings were OK to hold on the new platform and was promptly told that one was not. (Lindsell Train Global Equity). I sold it. I noticed that all my funds disappeared at the same time from old platform and reappeared all together on the new one week later. Then the same happened with all the equities. Lastly, my February drawdown was paid and the cash transferred. My impression was of a process in control. All forms were uploaded electronically and I had confirmations that they were correctly done in few days.
    The transfer was very smooth, but as the SIPP was already in drawdown, I’ve had to chivvy it along to make sure that my monthly pension this month will not be delayed. So nearly full marks to the new platform.

    The previous transfer in 2019 was a nightmare and foundered on the new platform not accepting the same class of fund as old one held (again an issue with an LT fund). At the time I was ignorant of the complexities of share classes. I had to sell some funds expecting a rapid transfer of the remaining cash to buy an equivalent investments. However the cash transfer delayed, I was out of the market for nearly two months and lost several £000s. Process total time c. 4 months.

    An article Sharesoc on the significance of OEICs classes would be very useful.

    I had an added issue with the new platform. I held several REITs. The old platform always organised payment of PIDs gross, without deduction of income tax, something any pension fund or ISA can do. I spotted this immediately but after 18 months the new platform has not resolved this and I am several hundred £s out of pocket. A simple despatch of a form to the REIT would suffice.

    I still have an ISA with HL as does my wife, while my children have (adult) SIPPs. I think Hargreaves Lansdowne are excellent. Website is very useful and on phone help was always great, though I did not need it in 2020. But the charges are ridiculous.
    I’m so happy to see a big change in the process for changing SIPPs compared to two years ago. At least some are getting their act together.

    • Roger Lawson says:

      As regards REITs, the tax due on PID dividends is deducted when being paid, but the ISA/SIPP operator can then reclaim the tax. However some platforms seem to have problems with doing this whereas others do it quite quickly. I am surprised to hear that a platform was paying the dividends gross. You certainly need to check that such tax refunds are obtained.

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