Apparent large loss after buying index linked gilt

Lowtrawler

leosayer said:

If I was asked for produce a 'finger in the air' estimate for a platform to make such a change, I would want to allow 30-40 days effort. If the system is supported by third parties then the cost is likely to be in 6 figures.

In fact, I'd be surprised if they don't already have the requirement on a backlog and given those numbers it would take some serious regulatory or client pressure to get it implemented. This is why complaining is so important as long as it doesn't make the service worse.

That sort of change would be classified as minor. Without change, ii will lose my business and I am unlikely to be alone. I reckon ii make around £500 per year from me and so, on a DCF basis, it is likely to cost ii around £5k for me alone. They only need to risk losing 25 customers like me to make the development pay for itself.

IMV, they are already breaching the new FCA treating customers fairly requirements. They are putting SIPP customers holding IL gilts in a position that could cost them many thousands by not valuing the portfolio correctly for PCLS. My complaint to the Ombudsman will provide an official ruling.

kempiejon

@Lowtrawler do you know anecdotally if others have complained to providers, FCA, ombudsman thier MPs? It's customer force that might make change without offical rulings. I'm holding some gilts, nothing IL at the mo but have had them and probably will again, probably not going PCLS route in my SIPP
I wonder how long the ombudsperson will take and if ruled unfair would the brokers have to retrospectively unwind thousands of PCLSs to try and make good. Cripes what a job. There was the passing mention to valuations to inherted estates. Not another confounded mis-selling or whatever this harris-up should be called to put customers prices up.

Lowtrawler

kempiejon said:

@Lowtrawler do you know anecdotally if others have complained to providers, FCA, ombudsman thier MPs? It's customer force that might make change without offical rulings. I'm holding some gilts, nothing IL at the mo but have had them and probably will again, probably not going PCLS route in my SIPP
I wonder how long the ombudsperson will take and if ruled unfair would the brokers have to retrospectively unwind thousands of PCLSs to try and make good. Cripes what a job. There was the passing mention to valuations to inherted estates. Not another confounded mis-selling or whatever this harris-up should be called to put customers prices up.

I am unaware of any similar complaints. I also think my single complaint should be enough for the Ombudsman to act. The legislation requires assets to be valued at a market price when taking a PCLS. I don't believe the clean price can be considered a market price. Using the clean price will cause detriment to customers taking a PCLS and so cannot comply with treating customers fairly. This is my view and I expect the Ombudsman will agree with me. If not, I will simply move to AJ Bell.

booneruk

Lowtrawler said:

The legislation requires assets to be valued at a market price when taking a PCLS. 

If that's the case, and relevant in this gilt situation then how does it work when you hold  mutual funds (priced each 24hours) or stocks/ETFs with big spreads that have low trading volume?

Just thinking out loud, am not saying you're wrong.

leosayer

Lowtrawler said:

leosayer said:

If I was asked for produce a 'finger in the air' estimate for a platform to make such a change, I would want to allow 30-40 days effort. If the system is supported by third parties then the cost is likely to be in 6 figures.

In fact, I'd be surprised if they don't already have the requirement on a backlog and given those numbers it would take some serious regulatory or client pressure to get it implemented. This is why complaining is so important as long as it doesn't make the service worse.

That sort of change would be classified as minor. Without change, ii will lose my business and I am unlikely to be alone. I reckon ii make around £500 per year from me and so, on a DCF basis, it is likely to cost ii around £5k for me alone. They only need to risk losing 25 customers like me to make the development pay for itself.

IMV, they are already breaching the new FCA treating customers fairly requirements. They are putting SIPP customers holding IL gilts in a position that could cost them many thousands by not valuing the portfolio correctly for PCLS. My complaint to the Ombudsman will provide an official ruling.

Some negative publicity from a finance journalist / YouTuber might get them moving even quicker. 

leosayer

Lowtrawler said:

leosayer said:

If I was asked for produce a 'finger in the air' estimate for a platform to make such a change, I would want to allow 30-40 days effort. If the system is supported by third parties then the cost is likely to be in 6 figures.

In fact, I'd be surprised if they don't already have the requirement on a backlog and given those numbers it would take some serious regulatory or client pressure to get it implemented. This is why complaining is so important as long as it doesn't make the service worse.

That sort of change would be classified as minor. Without change, ii will lose my business and I am unlikely to be alone. I reckon ii make around £500 per year from me and so, on a DCF basis, it is likely to cost ii around £5k for me alone. They only need to risk losing 25 customers like me to make the development pay for itself.

IMV, they are already breaching the new FCA treating customers fairly requirements. They are putting SIPP customers holding IL gilts in a position that could cost them many thousands by not valuing the portfolio correctly for PCLS. My complaint to the Ombudsman will provide an official ruling.

Some negative publicity from a finance journalist / YouTuber might get them moving even quicker. 

Hoenir

booneruk said:

Lowtrawler said:

The legislation requires assets to be valued at a market price when taking a PCLS. 

If that's the case, and relevant in this gilt situation then how does it work when you hold  mutual funds (priced each 24hours) or stocks/ETFs with big spreads that have low trading volume?

Just thinking out loud, am not saying you're wrong.

Stocks/ETF's are traded at mark to mark. 

Bond prices i.e. Gilts , Corporate etc are quoted on the London Stock Exchange at clean prices. Interestingly Preference Shares are quoted at dirty prices. 

In the US exchanges also price clean on bonds. In Europe dirty prices are more prevalent. 

OEICS are valued at the latest dealing price. The underlying assets constantly fluctuating in value in the case of a full global tracker. As there's only short windows of opportunity to accurately price units. 

booneruk

Hoenir said:

booneruk said:

Lowtrawler said:

The legislation requires assets to be valued at a market price when taking a PCLS. 

If that's the case, and relevant in this gilt situation then how does it work when you hold  mutual funds (priced each 24hours) or stocks/ETFs with big spreads that have low trading volume?

Just thinking out loud, am not saying you're wrong.

Stocks/ETF's are traded at mark to mark. 

Bond prices i.e. Gilts , Corporate etc are quoted on the London Stock Exchange at clean prices. Interestingly Preference Shares are quoted at dirty prices. 

In the US exchanges also price clean on bonds. In Europe dirty prices are more prevalent. 

OEICS are valued at the latest dealing price. The underlying assets constantly fluctuating in value in the case of a full global tracker. As there's only short windows of opportunity to accurately price units. 

What I was trying to get at is that none of these assets can be accurately priced until an actual order is made, therefore how can the person looking at their portfolio value at any time have a truly accurate value?

In the case of unit trusts you really do have no idea on trade price, you just schedule a trade and you're at the mercy of that day's valuation.

I have some gilts on Interactive Investor. I only see the dirty price when I go half way through the process of placing a market order - but as far as I understand it the platform couldn't make automatic orders and not fulfil (in order to get an 'accurate' sale price) because that would fall foul of some regulation. II could better estimate using recent trades  along with some maths, but that would never be certain.

incus432

I applied to move my holdings (IL gilts) from iweb to AJBell and told them why I was doing so. AJBell fee is already at the capped level (42pa) so no extra cost

incus432

On a related issue, what is the explanation for the rapid recent change in price and yield on TR26?