The FCA has today published Policy Statement 19/29, Making transfers simpler – https://www.fca.org.uk/publication/policy/ps19-29.pdf
Andy Bell, chief executive of AJ Bell, comments:
“Transfers of assets between platforms is an area that needs improving in order for customers to more easily move to better value services. The decision by the FCA to require platforms to offer in-specie transfers of funds as well as share class conversions where this is required to facilitate an in-specie transfer is a welcome move. However, this largely just reinforces what is already common practice within the industry.
“These changes won’t remove the complexity of multiple share classes which is arguably a bigger barrier to transfers, because not all platforms can hold all share classes. The solution here is to reintroduce cash rebates, on the basis that these must all be paid to the customer’s account and cannot be retained by the platform, so it is disappointing the FCA has decided against this.
“Reintroducing cash rebates would enable there to be a single retail share class for each fund with platforms able to negotiate discounts for their customers in the form of cash rebates that are paid into the customer cash account on the platform. Negotiating lower fund fees for customers is something the FCA has been encouraging platforms to do. Fears that these cash rebates will be used to confuse platform pricing are unfounded and a single share class per fund would enable far easier transfers between platforms.
“We note the FCA is planning to consult on exit fees early next year and we look forward to participating in that consultation. We are supportive of the FCA’s direction of travel here and we believe any ban or cap on exit fees should be applied across all similar products and services, including life company products and vertically integrated firms
“Exit fees are not unique to platforms and therefore it is not right to look at them in isolation. The most pernicious exit fees in the market are those that are embedded within products that are designed to recoup upfront costs of selling the contract – these can be as high as 5 - 6%.
“Applying any ban or restriction on exit fees across the whole industry would ensure there is a level playing field for what are very similar products and would be a good outcome for customers.”