Platform switching

by Jill Chadburn on 03·03·2020

When platforms came along, they felt like a utopian solution to replace the old, tied insurance products.


As time has gone on, it sometimes feels like platforms are evolving back into the things they once tried to replace.


With more emphasis on Centralised Investment Processes, Due Diligence and PROD, the need to be able to move clients between platforms is very real.


The FCA aims to make it easier for consumers to transfer their asset from one platform to another. 


Following the Consultation Paper 19/29 issued by the FCA in March 2019 they have reviewed feedback they have received and published the Policy Statement on 13 December 2019 highlighting the policy decisions made to improve competition between platforms.


The FCA found that competition in this market was limited by the barriers facing consumers when they try to switch platforms.


  • The first barrier was exit fees, which they plan to consult on separately in Q1 2020.
  • The second barrier relates to ‘in-specie’ transfers and unit class conversions.


Customers should be able to make ‘in-specie’ transfers between platforms without liquidating their assets, especially if liquidating assets could lead to a tax charge or incur a loss in growth during the period of disinvestment.


Reasons cited for why financial advisers and consumers often find it difficult to move from one platform to another included the length of time, complexity and cost involved.


The new rules in PS19/29 are designed to introduce requirements for platforms to:


  • offer consumers the choice to transfer units in investment funds that are common to both platforms via an in-specie transfer;
  • request a conversion of unit classes, where this is necessary to enable an in-specie transfer to take place; and
  • ensure that consumers moving onto a new platform are given an option to convert to discounted units, where these are available for them to invest in.


The FCA have stated ‘we expect this to improve competition in the sector, increase efficiency and improve the consumer experience. We consider that overall this will help us to deliver public value through a better functioning retail distribution sector.’


However, probably the biggest challenge to the re-registration process, is that both the ceding and receiving platform must hold the same share class.  Where this is not the case, a conversion is required at some point in the transfer process to move the holding into a share class held on the receiving platform.


Some respondents to the Consultation Paper, informed the FCA, ‘that proposals overlooked the key role of fund managers in the transfer process, that some fund managers do not respond to re-registration (and conversion) requests promptly, or keep the ceding and receiving platforms up-to-date regarding progress.’


It was agreed that for this to work the industry will need to adopt technological solutions to be able to process the re- registrations (and conversions) efficiently, but the Report does not prescribe the way in which firms should implement the change.


The new rules with will come into force on 31 July 2020, but the reality is that until technology, or even the mindset of some platforms, changes it is going to continue to be hard to move clients easily.

Until such time, you should at the very least look at how exposed your clients (and subsequently you for giving the advice to use the platform in the first place) are to these difficulties.


As such, you should ask the platforms your clients use for three things.


  • if the ceding and receiving platform do not hold the same share class what are the options available i.e. if a conversion is required at some point in the transfer process what is your company doing to help simplify the process.
  • Will the investors be offered the option to convert to discounted units, where these are available for them to invest in.
  • What additional paperwork if any, will the financial adviser/investor need to complete in order re-register holdings with your platform.


This will help you identify any problems so that you can start to think about solutions.