New HL fee structure from 01/03/26

masonic

https://forums.moneysavingexpert.com/discussion/comment/81863999#Comment_81863999

The COBS amendment states that if they are classed as a platform service provider, they "must request the fund manager to carry out, and take any other reasonable steps to bring about, the conversion of the units into the appropriate discounted unit class". However, I am not sure what to make of this in the consultation part:

2.6 - Scope: A few respondents queried the scope of the remedy. In particular, why it applies only to units in investment funds (as opposed to all investments) and only to platform service providers (ie not to firms offering ‘comparable services’ like SIPP or ISA providers, discretionary investment managers and fund managers).

So are SIPPs and ISAs out of scope? A platform service is defined as: platform service, so is the investment management part considered ancillary to the ISA/pension management part?

Since these rules have been in force since July 2020, I'm struggling to see why what is happening in practice seems to be differing from what should happen.

Here is an example from 2023, where it appears an attempt may have been made, but it wasn't successful: Link

I guess it does tick all the boxes - request was made, reasonable steps taken… I think the root cause of this issue was the two providers did not have a shared unit class they both supported, which is quite common when one offers a super-clean class.

TheTelltaleChart

https://forums.moneysavingexpert.com/discussion/comment/81862515#Comment_81862515

there is no fee for cash holdings, which may be why HL is telling me to buy stuff so they can start charging me again 🤣

They make more from you holding cash, because while there is no explicit fee, they keep some of the interest from the banks with whom they deposit the cash. Which is why the rate they pay you on your cash is quite low.

GeoffTF

https://forums.moneysavingexpert.com/discussion/comment/81864071#Comment_81864071

It was not long ago that most platforms charged for transfers out and that transfers typically took months and sometimes more than a year. The main suppliers have dropped their transfer fees, but there are still some laggards, notably iDealing. We now have reports of transfers taking days, sometimes even with funds. The are some failures, but there are with just about everything. The FCA has clearly been applying a lot of pressure. Hopefully, they will soon turn their attention to fund class conversions. It seems clear that the FCA rules require these conversions to take place. If they do not, the customer should make a formal complaint and escalate it to the Ombudsman. Perhaps that will give more visibility to the problem, and prompt tougher FCA action.

masonic

https://forums.moneysavingexpert.com/discussion/comment/81864619#Comment_81864619

I noticed a huge improvement when I stopped holding OEICs/UTs and opted for exchange traded investments. Nowadays it isn't economically viable for me to hold the former with the higher platform fees in so many places. It does also sidestep the complexities of unit conversions. But I agree, anyone who ends up in a worse position due to being out of the market unnecessarily during a transfer ought to complain. Though some might get lucky, transfer during a stockmarket correction, and ultimately end up better off as a result. So a platform failing in this regard can be a win-win for the investor.

GeoffTF

https://forums.moneysavingexpert.com/discussion/comment/81864693#Comment_81864693

Being out of the market during a transfer does not make much sense to me. Selling and buying an equivalent investment that is available on both platforms before the transfer would make more sense. Nonetheless, there will be people who believe that the fund they are holding has the unique ability to make them rich.

masonic

https://forums.moneysavingexpert.com/discussion/comment/81864975#Comment_81864975

But being out of the market in this scenario carries zero risk and the potential for a positive outcome.

Say you have £50k invested in ACME Global Equity Class S at 50,000 units. Your new platform only carries Class P units and is unable to convince the fund manager to convert it during the transfer. You are therefore told that to progress the transfer you will have to transfer this holding in cash. You proceed under protest, as you have not been provided with another way forward.

Scenario 1: During the transfer global equities correct by 10%. When the cash is received in the new platform you can buy 54,000 units of ACME Global Equity Class P worth £50k, whereas 50,000 units of ACME Global Equity Class S is now worth only £45k - you have made £5k profit owing to the cash transfer.

Scenario 2: During the transfer, global equities soar on positive economic data. When the cash is received in the new platform you can only buy 46,000 units of ACME Global Equity Class P worth £45k, whereas 50,000 units of ACME Global Equity Class S is now worth £55k - you have made a £5k loss owing to the cash transfer… so you raise a formal complaint about not being offered the option to convert your units and demand a cash payment of £5k plus £100 for distress and inconvenience. The provider has no option but to uphold your complaint and pay you off, or let it pass to the FOS who will surely decide in your favour and probably levy a case fee on the provider.

You have effectively been offered the opportunity to take a bet on the market with any losses refunded.

Whereas if you choose to manually sell and buy another equivalent fund, say E-Corp Global Equity Class B, prior to initiating the transfer, you will potentially incur non-refundable dealing charges, swing-pricing/spread, a day out of the market, and may feel the need to switch again when the transfer completes. You will be potentially be worse off than in either of the two scenarios above.

GeoffTF

https://forums.moneysavingexpert.com/discussion/comment/81865061#Comment_81865061

That is fair enough unless the FOS decides that you consented to the cash transfer. It would be safer to raise a formal complaint with whichever party refuses to arrange for the unit class switch (or both of them). You have then mitigated your loss, and should succeed with a claim for any additional fees.

granta

https://forums.moneysavingexpert.com/discussion/comment/81865131#Comment_81865131

I guess it all depends on the terms and conditions of the broker who refuses to do the conversion. I always ask to transfer in specie but there is always a caveat in the tick box that a part cash transfer may be necessary if conversion isn't possible. So I can't see how FOS would find in your favour there.

I usually tick a box to ask for that asset to be left behind if it can't be transferred in specie.

GeoffTF

https://forums.moneysavingexpert.com/discussion/comment/81865374#Comment_81865374

The point is that the FCA does not seem to accept that conversion is ever impossible. The rules say that it has to happen. You are right to tick the box to say the asset must be left behind if it cannot be transferred in specie, but you should make a formal complaint if it is left behind. The Ombudsman should rule that the broker must make the conversion and complete an in specie transfer, or state publicly why it cannot be done in their decision, which should be a wake up call for the FCA.

granta

https://forums.moneysavingexpert.com/discussion/comment/81865441#Comment_81865441

Thanks, I didn't know any of that