Re-registration can't come soon enough[

20 April 2010

Ian Thomas, AXA Elevate’s head of customer experience and online services, believes the deadline to allow re-registration on and off platforms is too far away and that now is the time to act.

The issue of re-registration has clearly been of concern to the regulator, as well as many advisers and their clients, for some time now, but the tone has hardened noticeably in the latest FSA discussion paper (DP 10/2). If it wasn’t clear enough before, then it is now: both platform operators and IFAs need to pay urgent attention to this issue, or risk action being taken against them. As the FSA points out in the paper ‘…platforms advice will form a supervisory priority’.

It’s been my view for some time that a platform that does not allow its clients to re-register their assets off their system is in clear breach of TCF outcome 6; customers should not face ‘unreasonable post-sale barriers imposed by firms to change product, switch provider, submit a claim or make a complaint.’

Where re-registration is not available, customers have to sell and repurchase their holdings in order to transfer them elsewhere. In the case of unwrapped assets, this could cause a tax liability and even ISA customers may incur additional transaction costs or losses due to being out of the market.

Unfortunately, from a consumer perspective, you are much more likely to run into these problems than not, as the main culprits are the three largest fund supermarket platforms, which collectively hold around 80% of IFAs’ platform assets.

Of course, I hear you cry, ‘he would say that wouldn’t he!’ But don’t take my word for it; the FSA describes the current position as a ‘poor outcome as customers should be able to transfer their assets elsewhere if they are no longer satisfied with the service they receive. The lack of re-registration also presents a potential barrier to new entrants to the platform market.’ The FSA also draws attention to the fact that some platforms are still encouraging assets to be re-registered onto their platform even though they do not allow them to be re-registered off.

The latest detailed regulatory guidance on the use of platforms (the Suitability and Disclosure Assessment Template) also provides food for thought. Question 6.9 on the checklist asks: Where the platform does not permit in-specie re-registration away, was this clearly disclosed in the suitability report? The accompanying notes elaborate that ‘the suitability report should explain the potential disadvantages of a transaction. We expect advisers to explain the potential disadvantage with some platform operators who do not permit investors from re-registering some assets away from the platform.’ How many IFA businesses are doing this at the moment? Given that the majority of new asset flows are still going to platforms which do not permit re-registration off, I am assuming that there will be a good deal of re-evaluation going on as I write.

In my opinion the FSA’s deadline of the end of 2012 for all platforms to allow re-registration off is just not soon enough. The industry should have already solved this issue for itself, without the threat of regulatory intervention. The law was changed over a year ago to allow the in specie transfer of assets without a ‘wet’ client signature but it still isn’t benefiting clients.

The introduction of standardised processes to facilitate the process would of course be welcome, but using this as a reason not to allow clients to re-register assets is just a smokescreen. AXA Elevate already offers re-registration on and off platform, at no cost, and we would welcome bi-lateral discussions, particularly with the fund supermarkets, to find a resolution to this issue as soon as possible.