Important Update on Transfers – 16 December 2021

Since we last wrote in October, we are pleased to share that a recent Platforum: Adviser Platform Report, featured Hubwise as having the largest proportional percentage gain of assets under management in Q3 2021.  While we know this doesn’t make the frustrations of the transfer process any easier, we thank you for continuing to drive through new business.  Over 90% of transfers initiated in the past 12 months have completed, amounting to almost £1bn onto the Hubwise platform.

Thank you to those of you who have shared feedback about our last update.  We know that the transfer diagram was well received and that you found it useful.  We therefore attach further diagrams, courtesy of Altus, which include a little more detail and overlay share class conversions.  This process is something we will come back to later on in this note.

In the meantime, we thought it helpful for to expand on the roles some of the other parties play in the overall transfer process.  You will obviously be familiar your own role as the Investment Manager plays and we imagine you will be comfortable with the roles of the acquiring and ceding platform and that of the Fund Manager.  We have therefore focussed on the less visible roles of Custodian and Transfer Agent, to explain a little more about the part they play in the overall transfer process.

Parties involved in the transfer process

Custodian - a Custodian has three primary responsibilities:

1. Safekeeping of assets: maintaining a record of ownership, valuation, accounting and reporting of assets (owned by a plan/fund/institutional investor)
2. Trade processing: tracking, settling, and reconciling assets that are acquired/disposed of either directly or indirectly, through delegated authority from a Fund Manager
3. Asset servicing: maintaining all economic benefits of ownership, such as income collection, corporate actions and proxy issues

The ceding platform, Fund Manager, or acquiring platform may use a Custodian to complete the final reconciliation of assets.  While this takes place, funds will often show as having left the ceding platform but BUT may not yet be visible on the acquiring platform, which we understand can cause both confusion and alarm. 

Usually, this is because the settlement/confirmation statement has not yet been provided by the Fund Manager and therefore the ceding platform/Custodian, cannot complete the final settlement and allocation of assets.  These statements are issued to us mostly electronically but can be physically through the post.  Some Fund Managers issue these on an ad-hoc basis and others on a weekly or even monthly basis, so this can often add further time to the overall process.

Transfer Agent - a Transfer Agency has two primary responsibilities:

1.   Ownership: managing the change in ownership of stocks/shares and maintaining an accurate register of their ownership

2.   Payment: acting as agent for the payment of dividends and other distributions to investors

Fund Managers may outsource the administration aspects of the process to a Transfer Agent to complete on its behalf.  This usually involves cancelling, transferring, or updating share certificates and ensuring the master shareholder register is up to date. 

Share class conversions

Getting back to the subject of share class conversions and a recent article on Citywire, linked here if you have access and wish to read it: https://citywire.co.uk/new-model-adviser. 

This article confirmed that the UK Platform Group (UKPG) had written to the Investment Association, regarding some Fund Manager’s non-compliance with the making transfers simpler rules mentioned in our last update (these fall under COBS 6.1H).

UKPG members have expressed disappointment that a significant proportion of the third-party administrators working for Fund Managers have yet to put in place mechanisms to support automated share class conversion instructions, which were an important part of the overall initiative. 

Whether or not the Fund Manager supports the conversion process electronically, the instruction can still be completed as part of the transfer process.  For electronic transfers (GIAs and ISAs, via the Altus Transfer Gateway (ATG) and cash SIPPs, via Origo), the instruction can be input at the same time the transfer is initiated.  Both ATG and Origo send an electronic notification to the Fund Manager and if they support the conversion process electronically, this can usually be completed in a matter of days.  Where the conversion needs to be done manually, this is likely to take several weeks and can therefore impact the overall transfer timescale.

There is also the option for the conversion instruction to be input into ATG and Origo on receipt of the funds. These funds are held in a suspense account, until the conversion is complete, and they can be applied to the new share class SEDOL.  This does mean there may be a period before funds can be applied to the investor’s record and you will need to consider this accordingly.

Of course, you can also instruct a conversion at any time, regardless of whether a transfer is taking place.  Here is a link to the ‘How To’ guide we have recently added to the Knowledge Base.

Further improvements

Since October, we have also delivered further improvements, most notably;

• incorporating Origo updates into the portal MI reports for SIPP cash transfers
• including any crystalised values in the Account Details page of the portal 

We continue to work progress;

• incorporating non-Origo updates in the portal MI for in-specie SIPPs
• alternative ways of communicating transfer rejections to you
• including ceding party names on the portal screens for transfers in
• cleansing and updating third-party contact details for automated chasing

How else you can help

Thank you for your support with reducing the number of ad-hoc requests to chase transfers, that is very much appreciated and has meant we can spend more time identifying those cases that need our input, whether that is because a change in approach is required, or dedicated support is needed to resolve issues/delays.

You may also have noticed that we have started to explain why we prefer not to keep transfer related Freshdesk tickets open indefinitely.  As you will know from our separate Customer Service updates, we are currently focussing on realigning Freshdesk to ensure we can clearly see those tickets that need our attention.  This should also help us to ensure that the exceptional cases noted above, can be quickly identified and progressed.  That said, we do recognise that we won’t always get this right, so please do continue to say if you think a ticket should remain open, particularly if it involves more than just a progress update.  We really do value your support and we therefore want to ensure we give you the same in return.

Finally, another reminder of the importance of ensuring that the information on the transfer authority form is accurate. We have completed some analysis of transfer rejection reasons over the last period and 32% are due to incorrect or missing details including name, address, dates of birth, national insurance numbers and ceding party policy/reference numbers. By ensuring these details are correct at outset you will help to reduce the overall time it takes the transfer to complete.

We hope you have found this further update useful.  We will write again with further progress in the New Year.

Should you require any further information in the meantime, or have any specific queries, please do not hesitate to contact our Client Services Team, via Freshdesk.

Your faithfully

Douglas Boyce

Managing Director