Some of the UK's major platforms are considering writing to the Financial Services Authority (FSA) to complain about Cofunds, arguing the largest fund platform in the country is prohibiting easy re-registration.
The group is at the centre of a row between platforms because of a change in the way it re-registers assets onto rivals post-Retail Distribution Review (RDR).
Sources have told Investment Week that when Cofunds transfers clients' portfolios over to rival platforms, it automatically attempts to convert fund holdings from bundled share classes to clean share classes (without commission).
However, this method is creating delays in re-registration away from Cofunds and onto other platforms, as many rivals do not have a full suite of clean share classes available as yet. This effectively means Cofunds is retaining client funds until a solution can be found.
The only alternative is for advisers to sell their clients' holdings on Cofunds and then re-purchase them on the new platform. This not only creates tax problems for clients, but also impacts the value of their holdings as they would have to re-purchase funds at higher prices because of the bid/offer spread.
A number of platforms are considering writing to the FSA to complain about what they consider to be a breach of the conduct of business rules. These state re-registration must happen as seamlessly as possible, and in the quickest possible time.
One source said: "Platforms are considering writing to the regulator."
Rival platforms are also concerned clients are not being treated fairly as in many cases they have not asked for the conversion to the new share classes.
Currently, transfers are carried out once the platform which a client wants to move assets onto receives notice of their intention.
The receiving platform then contacts the current holder of the client's assets and asks them to transfer them over.
However, rival platforms have said because Cofunds is automatically converting holdings into clean share classes, they are not carrying out the client's instruction.
Re-registration has long been a major issue for the UK's growing platform market, with Tisa launching a campaign and working group to tackle this area back in 2009.
Cofunds confirmed it was converting advised clients into clean share classes now as it considered any request to move as a "disturbance event".
Verona Smith, head of proposition at Cofunds, said: "If the client is execution-only we will not convert, but if they are advised business and the adviser has advised them to switch platform, we view that as a disturbance event and commission is then turned off."
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