Compare and contrast…
3 months isn’t bad even for an IFA transferring pensions. Some providers are notoriously bad for processing transfers.
I used to work in life company as a broker consultant and I could list each company that always made new hoops to jumps through for transfers.
IFAs would be screaming at me why its not happened and it always had to do with the ceding scheme.
Re-registration allows you to move investments you already hold from one setting, such as with a stockbroker or investment platform to another setting, or service.
This simply involves changing the name of the shareholder on the register of holders to reflect the new setting.
If you decide to re-register to a product wrapper, such as an ISA or General Investment Account (GIA), when the process is complete the investments will be held on your behalf in safe custody by us.
As investments are not sold and re-invested they are never out of the market, and as such you will not miss out on any gains (or losses) that may have been made.
The first comment is made on my earlier blog by K Smith and reflects the resignation of those IFAs , pension managers and consumers to the lot of those trying to aggregate their pension pots – get the pots to follow the member.
The second comment is taken from the website of Novia, a funds platform which like its peers takes the free-flow of money from one “setting” to another as something to be proud of.
I was beginning to despair. The insurance company I am transferring money to has at last accepted that they need to be a part of the problem and are treating me as a special case. Because I am an introducer and known to them, I get some service. But that does not bode well for others, I have simply jumped the queue.
There are three issues that continually crop in conversations with the insurer.
- Customers need to be protected from mis-selling; this is hardly surprising, insurance companies are still paying for the cost of restitution for the pension mis-selling problems of the 80s and 90s, they are now embroiled in pension liberation.
- There are within insurance products, hidden guarantees that must be retained.
- Ceding schemes are reluctant to make payments for commercial reasons.
I have seen no evidence of deliberate obstruction from ceding schemes but this may be still to come. The problems seem to be with points one and two, but I would add a fourth.
While the fund industry (operating on non-insured platforms) has got its act together, the insurance industry has failed to do so.
I decided to take some time out and find how these fund platforms had generated change. I found this press release from an organisation called TISA .
It turns out that TISA is a group of senior executives from the funds platforms supported by fund managers and various IT groups. I don’t know these people but I feel I should as they clearly adopt a “can do” attitude to problem solving.
I have seen another initiative of this kind in recent times, The Idea group, sponsored by LGIM have created data standards that now allow SWIFT messaging , rather than faxes, to activate the transfer of money from one fund manager to another.
What have the TISA and Idea initiatives got in common, they both appear to be technology led and driven by a few individuals who realise change can only come from the top and needs energy and nerve.
I do not think the insurance industry capable of moving forward in this way. They have an abundance of committees and, in Origo, an organisation that is supposed to sort these problems. Google Origo and the first ten items relate to making life easier for advisers to get agencies with insurance companies. It is as if the policy-holder does not exist.
But sooner or later the insurance industry will have to deal directly with customers. The vast majority of the British Public have made it clear they are not prepared to pay large commissions to complete a few forms, nor will they pay equivalent fees.
There are very simple solutions that can be adopted by the life companies that , were they in listening mode, I could get them to implement tomorrow.
- If a ceding scheme considers there is a guarantee to be given up in the transfer, they should make this clear by a simple means -such as an unexploded bomb, Scorpion or simply writing on red paper.
- Unless the transfer value has such a warning, then the transfer is in a safe harbour and should proceed.
- If the transfer is potentially toxic, then it should be referred either to an adviser or to a representative of the ceding insurance company.
- If following the conversation , the investor insists on moving the money anyway, that has to happen. But for both the ceding and receiving scheme, the transfer is now in a safe harbour, neither should be liable for retrospective litigation from the transferrer.
Which begs the question, who is paying for the advice. I would say that in 90% of occasions, the advice has already been paid for by the transferrer in initial or recurring commission. If the original adviser is no longer in place, then whoever has taken over the agency of the policy is now responsible (and that might be the insurer). Insurers who issued agency agreements to advisers who walked away from their obligations have to accept that the agency agreement reverts to them.
Where no advice has been given at the point of sale and a guarantee is in place (a tiny fraction of transfers), then the obligation is on the individual to either take advice or sign a waiver of liability.
These simple measures are not hard to put in place, they would take weeks.
They do not of course deal with the problems of buying and selling units which are still necessary for the insurance industry (but not for fund platforms). These issues will take more work.
But if the insurance industry was to take a proactive position, as TISA did with re-registration and as Origo have failed to do (obsessed as they are with helping IFAs but not customers), then we might have a platform for the free flow of money from pot to pot.
Conversations I have had in the past week suggest that there are one or two very senior people in the UK life insurance industry who do want to get to grips with this problem and are prepared to take positive steps. It sounds as if they will even be talking with people like me to make change happen.
So I am a little happy, despite another two weeks going by and no more money transferring to my new personal pension!
Who knows, we might even have pot follows member one day.