Supermarket Sweep: Alliance Trust Savings makes it easier to transfer investments
The change enables investors to transfer existing holdings without needing to go through a lengthy and potentially expensive and cumbersome paper based process.
There are a number of very good reasons why an investor wouldn’t want to sell their investment before transferring from one investment platform/wrap/supermarket to another. To do so can mean them paying additional fees and stamp duty to sell and repurchase their investments, then there is the risk that the price could move against them in the period they’re out of the market, which can be longer than a month depending on the investment though it usually runs to several days. Some can lose the tax advantage of something like an ISA, and be liable to pay capital gains tax on any profits made, even though they’re simply repurchasing the same investments.
Some investors might find the process so challenging that they prefer to sell their investments to transfer the easy way, in cash. Russell Waller, an IFA at Fairstone Financial Management said “the process is made inordinately complex with the In-Specie transfer forms worded in an almost Latin form of legal language that results in them being rejected for the slightest mistake. If the new process is in plain English it will get my support”.
Investors have complained about the lengthy, difficult and expensive process providers demanded to transfer their exiting investments without selling them.
The regulator the FCA and its predecessor the FSA made it a requirement as part of RDR (retail distribution review) that was introduced on January 1st this year for all platform providers to facilitate re-registration of assets.
The Retail Distribution Review (RDR) made it a requirement for all platform providers to facilitate re-registration of assets and unlike some of their peers, Alliance Trust Savings has always been supportive of this. However, until the involvement of industry body TISA and solution providers such as Altus, facilitating this process online was never feasible.
ATS has teamed up with Altus, a specialist financial services company, which is providing the software and systems to enable the automated transfer process to and from other platform providers.
Elaine Maddison, Proposition and Service Director, Alliance Trust Savings (ATS), commented: ”The ability to re-register assets electronically will bring benefits to platforms, fund managers, clients and advisers. Clients and advisers will now be able to assess the market and choose a platform that best suits their needs without the worry of being out of the market if they decide to transfer. However, efficient end to end registrations that take only 5-6 days to complete will only became a reality for all clients when more platforms and fund managers support the market practice. If a provider is yet to offer an online solution we will continue to offer an offline service to ensure no detriment to our clients.”
Following ATS’ adoption of automated transfers Ben Cocks, Product Director of Altus confirmed that around half of the assets held by the industry were now capable of being transferred electronically, following earlier adoption by the likes of Cofunds & Skandia.