STAR initiative to improve transfer times receives boost from FCA
3 April 2019
STAR reports a growing community of firms is signing to its initiative, which was highlighted in the latest FCA Investment Platforms Market Study report.
STAR is aimed at delivering an industry standard for the transfer and reregistration of consumer’s money and investments from one financial company to another, thereby significantly improving the transfer performance of the industry.
To date, 21 companies, including some of the key industry players, have pledged to work within the STAR framework, covering the savings and investments of in excess of 35 million pensions, savings and investments.
The STAR framework was flagged in the FCA’s Investment Platforms Market Study final report published in March, where the FCA made it clear it expects the industry to resolve the transfers issue or it would face “further regulatory action”. The FCA said it was encouraging firms to consider participating in STAR “as a way of improving the switching process and achieving better outcomes for consumers.”
The STAR framework was developed in consultation with the DWP, TPR and FCA (through TRIG, the industry working group). As part of the ongoing operation of STAR, Management Information detailing which firms have joined and how they are performing will be regularly submitted to the regulators. This means firms which don’t join or persistently fail to improve will be identified.
Tom McPhail, recently appointed chair of the STAR Steering Committee (pictured), said: “This is about the industry doing things better for their customers but there is a commercial benefit too: In the transfer market we all have to deal with counterparties. It doesn’t matter how slick your own systems are, if the firm you’re dealing with isn’t willing to work quickly then you’ll still end up wasting time and money dealing with manual queries and you’ll have an unhappy customer.
“Customers still sometimes have to wait for a pension scheme to write out a cheque and post it to complete a transfer. This one step in the process can add a week to a transfer. As a business, if you want to put a stop to this kind of arcane practice, you should sign up to STAR and encourage all other firms to do the same.
“Hargreaves Lansdown’s own experience shows the benefit of firms collaborating: 75% of our SIPP transfers are completed in 11 days when executed electronically, but postal transfers take an average of 68 days to complete. There are even cases of transfers taking over 450 days.”
The next stage of STAR’s development will bring in technical working groups and a supplier forum, with the first Steering Group meeting scheduled for May.
The technical forums will agree the processes for the collection and reporting of MI and a forum also is being establishing for service providers such as transfer and re-registration businesses. This will facilitate consultation, process improvement and consistency of standards on an ongoing basis.
McPhail added: “There is now both a moral imperative from the consumer outcome perspective and a regulatory imperative for firms to willingly address the transfer issue and with the FCA pointing in this direction the best way for the industry to show its commitment to improving its game is to join STAR and benefit from becoming part of the solution.”
The first 30 firms signing to STAR are being awarded a Founder Accreditation Mark, a highly visible endorsement of adoption of the STAR framework and its objectives to improve end-to-end transfers.
The 21 firms signed to STAR are:
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