FCA makes platform transfer rules

FCA has made new rules to make it easier for consumers to move between investment platforms and thereby improve competition.  The rules form part of the Investment Platforms Market Study remedy package and will take effect from 31 July 2020. FCA intends the rules to work alongside the measures industry.

The study had found that consumers sometimes have to liquidate their holdings to allow them to switch platforms, which can both lead to tax charges and investors may lose money if the value of an investment rises while they are not invested. Some consumers will also not bother to transfer if they cannot make a proper “in-specie” transfer.

FCA found that one reason that firms were not offering in-specie transfers is the complexity where there are bespoke unit classes within a fund, which lead to the need to perform a class conversion in order to do the transfer – some firms chose not to offer this, instead requiring customers to liquidate and rebuy.  FCA’s new rules are designed to require firms to offer transfers. The new rules, in COBS 6.1H, will require platforms to:

  • offer in-specie transfers for investments in funds that are common to both platforms;
  • request a conversion of unit classes if this is necessary to enable an in-specie transfer to take place; and
  • ensure that consumers who move to a new platform have the opportunity to convert to discounted units if any are available.

FCA has also published the outcome of its initial assessment of progress firms have made, and will follow this up with a further review in 2022.

FCA had decided regulatory action was needed in two respects.  It will be consulting on exit fees in early 2020






Emma Radmore