Speeding up the transfer of investor's holdings between platforms
It has been a long-standing objective of the FCA to ensure that retail investors are able to transfer their holdings in investment funds to and between investment platforms quickly and easily. This has been borne out in previous reviews, the Investment Platform Market Study and more recently in the Making Transfers Simpler regulations that came into effect in February this year.
It has been and remains our view that investment firms have a crucial role to play in achieving the regulator's objectives and providing a improved service to investors through shorter transfer times. We are also conscious that the FCA has already stated that they will consider further interventions should outcomes not improve and so we have set out a number of ways in which firms are able to demonstrate their commitment to meeting the regulator's intentions, which provide the ability for members to conduct a self-assessment of their own progress.
We think that these four actions, if adopted by the majority of IA members, will be seen positively as a demonstration of the commitment of our sector to speed up transfer processing and deliver the improved outcomes for investors that the FCA intended.
The IA Common Shareclass Register was developed in late 2020 at the request of the wider funds industry in order to assist compliance with the FCA’s rules around share class conversions and transfers. These rules, which came into effect on 1 February 2021, require platforms to:
1. Participate in the STAR and TeX cross-sector initiatives;
2. Ensure that your shareclass data is included in the IA Common Shareclass Register;
3. Review how you accept instructions from investors to process conversions - electronic messaging is highly preferable to methods requiring signature (fax/post);
4. Review your operating practices against the relevant section of the IA Fund Processing Principles (page 4), including the frequency with which you process conversion instructions (we are currently considering strengthening these further).
The Register helps facilitate this by providing details of the class that is commonly-available, and both platforms should be able to access. A conversion can then take place through that class.
The data is provided by investment firms and around 130 IA members have provided theirs so far. We are currently developing an improved register that will allow real-time updates and better user experience which is aimed to be available in Q4.
You can supply or update your data via email to csr@theia.org
The IA’s Investment Fund Operations Committee (IFOC) considers issues and informs IA policy in the areas of transfer agency and the servicing of investors in UK funds.
A key objective of this committee has been to identify ways in which the UK investment fund operations infrastructure can be improved, in order to enhance industry efficiency and customer experience, and to make recommendations accordingly to the industry. The recommendations are presented in the form of the Fund Processing Principles, which were last updated in late 2020.
In light of the recent activity mentioned above, the ‘Account transfers and re-registrations’ section is under review, but currently says:
The IA encourages its members and other firms operating in the UK investment funds market to commit to these Principles.