In specie transfers can often throw up lots of challenges for us, the adviser, and the ceding scheme, resulting in unnecessary back and forth between all parties. We asked Kate Tudor, who handles in species transfers for PSG SIPP, to discuss what’s involved in managing these on behalf of our clients and what pitfalls we frequently encounter’.
What are the biggest challenges when trying to organise in specie transfers on behalf of a client?
A clear understanding from the outset of what the adviser and their client are trying to achieve can almost immediately raise some challenges. Often, we’ll be provided with the ceding scheme discharge forms and our transfer in application form which indicates the transfer will be an in specie, however with no clear instruction on how they intend for this to be processed.
Requirements can vary greatly from those of the ceding schemes and investment providers. To help overcome this problem and fully understand what the adviser and their client hopes to achieve, we’ve developed a new in specie enquiry form which must be completed prior to submitting the business. Once we have received back a fully completed form, our first action will usually be to contact the adviser to discuss the case and ensure we have everything we need to proceed with organising the transfer on behalf of their client.
A lot of work goes into each and every in specie transfer before we are in a position to send the paperwork to the ceding provider for processing. This process always starts with an initial check to see if we can accept the funds. If the funds are not on our list of approved assets, we will then have to ask for further information from the adviser so we can complete our necessary due diligence.
Further issues can arise before we’re even ready to submit the transfer request. The ceding schemes will not always follow our instruction, and each have their own unique procedures and processes they will follow. For instance, rather than transfer the assets to a new bond, some ceding schemes will insist the bond is reassigned. This can result in lots of lengthy discussions to reach an agreement that fulfils the clients requirements, again adding more delays to the transfer process.
There are so many different scenarios and each case is very different and raises its own set of challenges, so it’s always hard to put a definitive process in place, let alone a definitive timescale.
Would you say these challenges have become more significant in recent times and if so, what’s changed?
All schemes work differently and with most organisations now working full time from home, everyone has had to adapt to a new way of working and agree what documents they will or will not accept by email. We’ve recently come across challenges with our own Deed of Assignment which we originally created to help us agree responsibilities between us and the investment provider. In the beginning this was accepted by most investment providers, however a few will now not accept this document and require us to complete their own versions. Unfortunately, it is never a straightforward case of signing this and getting the transfer underway; we must check what has been written carefully with support from our CEO, Duncan Parsons, due to the legal obligations contained within each document.
We must also wait to be sent this document from the ceding scheme, which can take a couple of weeks or more to receive, even with frequent chasing. This is also one of those documents that requires sight of wet signatures.
What is a typical deadline expected by a client or their adviser?
Advisers will often look at the timescales in the same manner as a cash transfer. It is important that advisers and clients understand
that this is not the case. If further information is needed, this can cause delays and the adviser needs to manage the client’s expectations. We do not chase these types of transfer weekly as this can raise red flag indicators of potential pension liberation fraud with the investor, so we will go by the last information we submitted to the ceding provider. For instance, if the last document we sent to the ceding provider was a Deed of Assignment; we know that scheme will send it to their legal department for checking before forwarding to the investment provider. The investment provider will also have their own internal checks to carry out before they are ready to proceed. When we know which ceding scheme provider is administering the transfer, we can manage the adviser’s expectations around completion.
What is a typical deadline delivered by a ceding provider?
Again, all providers are different. Some ceding providers are well known for being notoriously slow or impossible to get hold of. To that end they have no deadline. In addition, as there is more than one party involved in this type of transfer, we have to deal with outstanding requirements from each party.
In your considerable experience, what would you say are the most common mistakes that lead to unnecessary delays?
The lack of information or not having clear instructions from the outset are the greatest cause of unnecessary delays. We must also have a recent valuation dated within the last 3 months. This is essential to allow us to carry out our due diligence and check we can accept the funds, as no transfer can progress beyond this stage until we have all this information.
We hope our new enquiry form will make life easier for everyone and reduce or eliminate the need for us to spend time going back and forth with lots of queries to the adviser at this early stage in the process.