“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.”
Many platforms negotiate favourable terms with fund managers, benefitting customers that can access cheaper share classes on certain platforms as a result.
However, where customers move platforms this can present challenges in the re-registration process. In order for a customer’s investment to be moved ‘in-specie’ (meaning the customer stays invested without the need for a cash transfer) both the ceding and receiving platform must hold the same share class. Where this is not the case, a conversion is required at some point in the transfer process to move the holding into a share class held on the receiving platform.
Quilter recommends that fund managers instead conduct the conversion ‘in-flight’ between the two platforms. This is an alternative to either the receiving or ceding platform requesting a conversion before or after the re-registration and would avoid the need for all platforms to hold many different share class variants of the same fund.