This time it’s serious‒the FCA requires in-specie pension transfers

This time it’s serious‒the FCA requires in-specie pension transfers

Both acquiring and ceding platforms must go above and beyond to provide investors with in-specie transfers.

In-specie pension transfers

Investors require in-specie pension transfers just as much as in-specie ISA transfers because our retirement investments are too important to be taken out of the market for days or weeks. And, although the RDR enforces the same in-specie transfer restrictions on both, the grim reality is that providers' in-specie pension transfer services range from subpar to nonexistent.

The same support is offered for pensions and ISAs by the TeX open transfer system. However, compared to ISAs, the volume of pension transfers is far less. And, while the average ISA transfer takes one week, a pension transfer normally takes six to eighteen weeks since the great majority of in-specie pension transfers are conducted on paper rather than online.

Inconsistent provider support

And then there’s the issue of inconsistent provider support. For instance, Vanguard launched an excellent internal ISA transfer service, but this month stated that its new pension product would only accept cash transfers. Although I like Vanguard a lot, how can this choice possibly benefit the customer?

It's hard to say what caused this service gap. The relevant RDR regulations may be a bit ambiguous, and some have claimed they don’t cover pensions-although the FCA disagrees! Perhaps that’s why TISA did not include pensions in the scope of its initial work on transfers, (but it has since changed its mind in response to criticism from the public.) Another possibility is that the ongoing conflict over pension interoperability between TeX and Origo has slowed progress.

What happened to customer-centricity, or even just proper service? Sadly, rather than addressing customer requirements, all of these potential explanations are born of internal industry machinations. Despite all the news coverage about putting the customer first, it is obvious that we have not given the client any consideration in this instance.

New transfer regulations

Thankfully, it now appears the FCA has had enough, and that their new transfer regulations (PS 19/29) will be much clearer, at least for platforms. First off, the regulations' purview is clearer and covers pensions. Second, both acquiring and ceding platforms must actively participate in the transaction and make every effort to provide investors with in-specie transfers.

This time there will be nowhere for platforms to hide when it comes to in-specie pension transfers and hopefully, investors will finally get the same great transfer service for pensions that they already get for ISAs.

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