FCA regulations - time taken for dividend payments

lejog2003

I'm having problems with iii with late payment of dividends/interest from funds I hold there (as are others in this thread).

Before I transferred to them, I asked them when such payments would be credited to my bank account and I'm sure I was told that FCA regulations stipulated that it must be within x days.

Unfortunately I can't now find the message. Can anyone here point me in the direction of the relevant FCA regulation?

le_loup

When I enquired about the same thing, I was told that they credit the account immediately they receive it and if it was paid out it would take three days for BACS. And of course the fund manager pays it to the platform on the due date. Unfortunately this was a telephone conversation, the proof of which I only have in my head.

bowlhead99

I don't think the FCA specify a time limit. If the firm receives a dividend on your behalf, they have to treat it as "client money" (just like if you had made a deposit into your account). Client money has to be held separately from their own money and be subject to reconciliation etc to ensure they know how the total pot is split between their many customers and ensure there's enough money in the client money pot to cover everyone's balance.

Firms have to implement appropriate systems and controls to meet the regulations and objectives set by the FCA. But typically the FCA doesn't mandate exactly how those systems work because firms write their own policies and procedures.

There are some rules for fund managers, e.g. if you redeem out of a fund they have to send the proceeds within 4 business days of working out the valuation. But if you have an account with a platform or broker, and a standing instruction with them to send dividends to your personal bank account, I don't think the FCA would stipulate, "right, from the split second that money comes into the broker's account he has x hours to instigate a payment to the client and the payment must clear y days after being instigated." That sounds more like something the firm would have in its terms of service or client agreements and all firms would work in their own unique way.

So, and I'm happy to be corrected, I suspect the reference to FCA by the customer service person might have been intended simply as a reassurance that, don't worry, the FCA set rules about how we look after customers' cash so you should get paid out in x timeframe. But the timeframe would be some reasonable one of their own choosing rather than a matter of law?

Wouldn't stop you having every right to complain if things take longer than you agreed or reasonably expected though.

sorcerer

For ii, I was told they pay out dividends on time for 90% of the dividends, they are wrong, I have worked out it's more like 5% of the time. They also say they have an SLA of 10 working days to pay out, but this is not from the payment date, but from when they received the money from some weird third party company.

sorcerer

I also have another thread about this topic at https://forums.moneysavingexpert.com/discussion/5010778

lejog2003

bowlhead99 wrote: »

I don't think the FCA specify a time limit. If the firm receives a dividend on your behalf, they have to treat it as "client money" (just like if you had made a deposit into your account). Client money has to be held separately from their own money and be subject to reconciliation etc to ensure they know how the total pot is split between their many customers and ensure there's enough money in the client money pot to cover everyone's balance.

Firms have to implement appropriate systems and controls to meet the regulations and objectives set by the FCA. But typically the FCA doesn't mandate exactly how those systems work because firms write their own policies and procedures.

There are some rules for fund managers, e.g. if you redeem out of a fund they have to send the proceeds within 4 business days of working out the valuation. But if you have an account with a platform or broker, and a standing instruction with them to send dividends to your personal bank account, I don't think the FCA would stipulate, "right, from the split second that money comes into the broker's account he has x hours to instigate a payment to the client and the payment must clear y days after being instigated." That sounds more like something the firm would have in its terms of service or client agreements and all firms would work in their own unique way.

So, and I'm happy to be corrected, I suspect the reference to FCA by the customer service person might have been intended simply as a reassurance that, don't worry, the FCA set rules about how we look after customers' cash so you should get paid out in x timeframe. But the timeframe would be some reasonable one of their own choosing rather than a matter of law?

Wouldn't stop you having every right to complain if things take longer than you agreed or reasonably expected though.

Thanks for this, its been very useful, at least I know where to look on the FCA site, but as you say the rules are about custody of the money. Other platforms I have used have (HL, Fidelity, ATS) have specifically stated their payout times in their ts&cs or other client documents, but not iii, which is why I asked the question of them! I realise now with hindsight that I was fobbed off.

lejog2003

sorcerer wrote: »

I also have another thread about this topic at https://forums.moneysavingexpert.com/discussion/5010778

Yes I linked to it in the first sentence of my first post, however this thread was meant to be about FCA rules, as the title states, not iii.

JenniferK

sorcerer wrote: »

For ii, I was told they pay out dividends on time for 90% of the dividends, they are wrong, I have worked out it's more like 5% of the time. They also say they have an SLA of 10 working days to pay out, but this is not from the payment date, but from when they received the money from some weird third party company.

But your contract is with III - not some third party. Additionally, don't III state the dividend payment date in their fact sheets? Knowing the dividend payment date III should ensure that they recive the payment from the third party on that date - they don't because they don't have a clue about how to run the business.