Last week the FCA announced its feedback and final rules on making platform switching easier to boost competition in the platform sector.
In Policy Statement PS19/29 (Making transfers simpler - feedback to CP19/12 and final rules) the FCA said it would delay plans to ban exit fees until further consultation but other rules designed to improve switching - including in specie transfer - would come into force on 31 July.
The ABI, which represents most of the UK’s insurers and many investment companies, says that implementing the new rules by July will be tough.
Rob Yuille, assistant director for Long-Term Savings at the Association of British Insurers, said: “The rules on in-specie transfers and unit class conversions are welcome – they will make the switching process smoother and improve the customer experience, but they will be challenging to implement by July 2020.
“It is important the whole industry can implement the rules correctly to make sure conversions work best for businesses and consumers.
“We encourage the industry, especially fund managers, to sign up to the STAR initiative to improve the transfer process. We recognise automation should become the norm in order to improve processes even more, which we intend to promote through STAR and working with the regulator.”
Some 52 providers have signed up to the voluntary STAR initiative designed to make switching investments between platforms simpler and quicker.
Tom McPhail, chair of the STAR Steering Group, broadly welcomed the FCA’s plans and said STAR was ready to step up the pace. It will also publish information on companies’ transfer ‘performance.’
He said: "STAR has made significant progress in the active industry working groups, which have been held over the last 6 months. If an organisation is involved in the transfer process chain and the reporting of management information, they should join STAR today and show commitment to improving customer switching transfer and re-registration experiences.
"During 2020/2021, STAR will start to collect and publish the performance of companies when executing transfers, which will provide regulators, customers and their financial advisers with clear evidence of a commitment to improve their performance."
Steven Levin, chief executive of Quilter’s platform, Old Mutual Wealth, backed the FCA’s plans.
He said: “Switching platforms should be simple and straightforward for customers and the FCA acknowledges that platforms are already collaborating to find efficient processes that work in customers’ best interests through initiatives like STAR.
“We are pleased that the regulator sees merit in the proposed ‘in-flight’ fund share class conversions, which effectively means conducting the in specie transfer and the share class conversion simultaneously. We believe that would be the most efficient solution across the industry and would remove the need for platforms to hold multiple share classes purely for re-registration. The platform sector now must come together to explore this option in detail.”