Baffled By How In Specie Transfers Aren't Required By Law

In the UK, the current account switching service makes it really simple to switch current accounts in order to force banks to compete with each other and ensure customers aren’t put off from attaining a better service due to excessive administration. Nobody is locked in to a specific institution due to anti-competitive practices.

With that in mind, it truly baffles me how in-specie transfers aren’t treated in the same way as current accounts. It seems to me to be totally unjustifiable for a company to not allow customers to leave (or join for that matter) without first being forced in to performing a potentially disadvantageous financial decision in the form of closing stock positions, due to transfers being cash-only. It’s like a bank requiring you to empty your current account before you switch away from them. Why? Many would find it unnecessary and inconvenient at the least. I’ve heard the argument about brokers needing to identify share ownership etc etc but this is something that can easily be standardised across the industry if there was the political will.

Nobody loses in this scenario if in-specie transfers are allowed both in and out so with this in mind, I’d like to add my name to the already long list of people on this forum who have asked for in-specie transfers to be offered by T212. This surely must be one of the most important feature requests for customer choice, safety of investments and market competition.

My questions for the T212 team are; why do you currently allow cash transfers but not in-specie transfers? When can we expect to see in-specie transfers? I’ve seen many representatives on this forum say they might come one day but we don’t even get so much as a vague timeframe.

I honestly don’t see how improvements to trivial things such as the pies feature can be mentioned in the same breath as improvements to the transfers functionality.
Thoughts?

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Agree with you. It needs to become mandatory for brokers in my opinion.

It’s an issue across the industry.

Edit:

Deadlines and complaints

ISA transfers should take no longer than:

  • 15 working days for transfers between cash ISAs
  • 30 calendar days for other types of transfer

^ We need that changed first. Not sure if there is a ‘petition’ for it already, plus to add it should be a mandatory service for all brokers. If not we could work to write one? It would then correct the industry as a whole.

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there isn’t the political will because they have ‘more important’ (political sparring or some other nonsense :man_shrugging:) issues to deal with and people won’t agree on a decision, they have tried before. it affects such a small portion of people they don’t see the need for urgency. we may say it should be mandatory, but its the financial institutions doing the work, not the politicians.

there are brokers who offer in-specie sure, but at a charge and have you seen how long it takes to complete? in that timeframe you are locked away unable to do anything. I would rather sell on my own terms, move the funds to my new account and be back in action the next week.

It will be good to get it eventually, but I don’t have the view that T212 specifically should neglect other aspects of their service for the handful of people that want to hop about. to push the ball, we would need to rally people over social media, mainstream news et cetera.


your comparison is bad IMO, the whole reason current accounts are so easy to switch is because they are only handling money, or rather a digital-log of your money. it is so integral to daily life for all levels of society that banks cannot get away without offering the service and its heavily automated. share ownership is not currency, it has a lot of technical requirements they currently have to do manually, while banks have long been automated for cash.
T212 will offer it once they can automate it, but the lack of timeframe is because they are not working on it currently. the instant you announce a timeframe you have to allocate resources to the task. resources they don’t seem to have.

moving shares are more like moving house than changing your bank account IMO.

if the decision to move your account stacks up as a ‘potentially disadvantageous financial decision’ perhaps the decision to move needs to be re-examined. because if the positive is to stay, then the reason for leaving is either not good enough or hasn’t been judged properly. said another way, if the reason you are leaving, isn’t more important than the financial impact of doing so, you don’t have your priorities straight

I don’t see how in-specie transfers would benefit me more than improvements to the brokers service offerings will. because I have no use for the feature.

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I’ve had a quick hunt and not found any petitions out there yet.

On second thoughts, perhaps it’s something better to raise in general with the FCA rather than government given they monitor and help promote competition, and find out how best to take forward. I’m sure the interest is out there.

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Here’s something you may find interesting:

https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.fca.org.uk/publication/policy/ps19-29.pdf&ved=2ahUKEwjWqMbOyaPzAhVlnFwKHb2lBIgQFnoECAgQAQ&usg=AOvVaw3FzJa_cIAJkd1Ojq1QYG-e

As far as I’m aware rules got shelved due to COVID.

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Yeah that is specific to open ended funds reading the material, but does highlight the technical difficulties well. Might be worth reaching out to them for an update on a new ‘date’.

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I think those rules are now implemented, since February 2021. But they only concern an issue of transfer of units in different fund classes between platforms that do already offer in specie transfer.

Fortunately, for the UK investor a sale of shares followed by their repurchase on another platform can be done without triggering a big capital gains tax bill, due to the share matching rules of HMRC. The only cost is the bid/offer spread and any fx cost and commission on the repurchase. Investors who are tax resident elsewhere are not so lucky and may be forced to realise capital gains that they would rather not.

This means a transfer out by a UK tax resident of a US shareholding from Trading 212 to another UK platform might cost 0.1% bid/offer spread, plus 0.15% Trading 212 USD to GBP fx fee, plus repurchase commission, plus 0%-1.5% new platform GBP to USD fx fee, depending on fx fees of new platform.

I like the analogy that it is more like moving house than moving bank accounts. It is something the FCA or CMA should be addressing.

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