What stops provider retrospectively choosing a favourable transaction date when cashing-in?

rforsixpence

I'm transferring my (unliquidated) pot to a lower-charging provider. The sale on the Transfer Out side has happened. It appears to have been timed at the very bottom of the recent coronovirus stockmarket dip, leaving me £25k worse off. 

How do I know the assets were really sold at that date? What is stopping the provide *retrospectively* picking a recent transaction date to minimise their payout? Is there some way I can check?

It's weird because I was anxiously monitoring the value of my pot in the portal of my provider ("My Account") though the week when the transfer was due. Monday was bad. By Thursday it had recovered. On Friday, units held fell to zero, making me think phew, the sale had happened then. But now a transaction has appeared indicating the sale happened on the bad Monday. 

Prism

Sometimes it just happens that way. I was out of the market for about 7 days last summer when the market went up about 2% which I therefore missed. You will need to trust that the provider sold the funds on the day they said they did. 

Notepad_Phil

I can't guarantee that you've not been swindled here, but any reputable company would never do something like this as it's just not worth their while to do it as they would be out of business if they were ever caught.

What i can say is that in my experience it can take several days for a pension portal to get updated after a transfer. I've done multiple transfers and for me on average it seems to take at least a couple of days, and more usually three. Sometimes the transaction date value is worse than the later date, but just as often it has proven to be better.

It won't prove anything, but what date did the money arrive into where it was being transferred?

Linton

Why would the provider care whether your sale hits a high point or low point?  Any gain from temporary falls doesnt go to them but rather to the fund.  In any case your transaction is probably one of hundreds that happen daily.

Thrugelmir

What was the pot invested in? 
While £25k appears to be a large sum. To put this into context what was the % loss? 

SonOf

What is stopping the provide *retrospectively* picking a recent transaction date to minimise their payout?
Why would a provider want to do that?  There is no financial gain or loss for them.
Funds have a sell time in the day (the date the instruction was carried out) and a settlement date (typically 2 to 3 days later).  The time in the day when the instruction was keyed will depend on when the sale date occurred.  Some providers prefund sales and purchases. Some do not.   Once the transaction is keyed, it pretty much is set in process at that point.

By Thursday it had recovered. On Friday, units held fell to zero, making me think phew, the sale had happened then. But now a transaction has appeared indicating the sale happened on the bad Monday. 
Did it use unit trust/oeics, ITs, ETFs or insured funds?
If the sale was keyed on Monday, then it would have been transacted on Tuesday and a 3 day settlement would see the value drop to zero on Friday.   If the actual dealing date was Monday, then it would indicate it was keyed in before Monday morning (or very early on Monday morning).

SnowMan

Where a fund is sold or purchased on a platform, then there is theoretically a risk of fraud to my mind.

For example if a fund sale is ordered say on Monday, then the platform used by the investor could send through the order (batched with the netted off affect of sales and buys for other customers) for sale with the fund manager on the Monday. The sale then goes ahead on the Monday as part of the batched transaction, but if the Monday price is higher than the Tuesday price the platform could misinform the investor that the sale took place on the Tuesday rather than the Monday and the platform could pocket the difference between the Tuesday and Monday prices. If the Tuesday price is higher than the Monday price then the price used by the fund manager for the sale and price shown by the platform would correctly be the Monday price. But half the time (when the Monday price is higher) the platform fraudulently makes a profit.

There's no way for the investor to know this has happened as their transaction has been batched with the sales/purchases of other investors on that platform and all they are told is that the sale happened on the Tuesday.

Now I'm not remotely suggesting this happens at all (not least because if the platform were found out doing this it would be the end of that platform), but just saying there is theoretically a possible fraud here.

Usually where an investor sells/purchases a fund the fund manager will have a cut off time for the transaction to take place at the next pricing point (and the platform correspondingly a cut off time related to this) so that fund purchase/sale will take place at a  known pricing point to the investor, so that can act as your peace of mind.

I use Halifax Sharedealing for an ISA and I can predict in advance what pricing point will be used for fund sales and purchases based on cut off times. On one occasion it seemed to be a day late, but I worked out after a lot of effort that there was a holiday for the overseas fund on the Monday (even though the LSE was trading that day), so while the fund was priced on the Monday, there were no sales and purchases on that day, hence the delay in the transaction.

From experience with some other platforms /insurers you can't always predict when the fund sale/purchase will go ahead, so it can leave an uncomfortable feeling when the transaction seems to take a day too long and the price movement over that day goes against you.

Platforms have the habit of showing provisional sale or purchase dates and prices on accounts which are then 'corrected' when the sale and purchase goes through, which can be confusing to investors, but you can see why they do this.

So interesting question rforsixpence.

 

Andrew31

25k worse off.  How much was in the pot, what was it invested in?
Who actioned the sale, was it done by you or your advisor??

rforsixpence

c.700k in global tracker fund and uk tracker fund. It was me who decided/asked to Transfer In to a new low-cost sipp acct with ii.co.uk, from a higher-charging Trust; it wan't a financial adviser. The funds couldn't be held by ii.co.uk, so the transfer couldn't be in specie, it had to be as cash.

Of course, the two platforms just get on with the transfer at their own pace, and I have no say in the precise timing of the sale part. Coronovirus caused a brief market dip of 3-4%, and days later I'm retrospectively notified that the sale happened right in that dip, but how do I know it really did? What can I check? What are the protections against the Trust using hindsight to choose the lowest date, saying that's when the sale happened, but actually providing the cash out of float, say, and pocketing the difference? There must be some protection against front-running like this, surely.

Also, odd that their portal was still showing my full holding 3 days after the supposed sale; perhaps that's just admin lag but it seems poor.

MarkCarnage

No benefit at all for the platform in trying to 'time' the transactions. They should be able to evidence that transactions took place within their normal timelines, and in the case of funds they will be dependent on the fund manager executing the trade too.
There is advantage in being able to do in specie transfers in these situations, if you are worried about 'out the market' risk. They do take longer, and not really feasible for funds, but I did it with investment trusts/shares when transferring platform and that worked fine. 

If you were worried about  the risks of being out the market, check in advance with the platforms what their execution policies are. It won't protect you, but at least you know.....in the longer term it will be a pimple on the radar of market movements. 

rforsixpence

Thanks for all the replies, much appreciated. It is reassuring to hear that others have sometimes profited while being out of the market.

SnowMan, what you describe as a theoretical opportunity for fraud is exactly the scenario I had in mind. Part of your reply (and that of others) suggests that one can predict the transaction date, to within a day or so, based on when one requested the sale. Yes, I can see that's true when doing share/fund trades on an ISA etc. But a pension pot transfer like mine can take 6 weeks or more, and I was told that one can't predict (with accuracy greater than a fortnight, say) where in that window the sale will happen.

BTW of course I am certainly not accusing anyone of fraud, but I am wondering what the protections are and how the customer is meant to verify that these protections worked.