If your ISA is held with a fund supermarket you might get an unpleasant surprise should you decide to transfer it elsewhere..
Fund supermarkets (or 'platforms' as they're sometimes called) are a genuinely useful innovation. They allow you to keep your investments in one place, even though he underlying funds may be run by a variety of different management groups.
The end result is far less paperwork, simpler and faster fund switching, a single valuation showing your whole portfolio and potentially better deals via some discount brokers. You can read more in our Using Fund Supermarkets Action Plan.
But there's a potential flaw that affects ISA investors with Cofunds, FundsNetwork and Skandia, three of the largest supermarkets. They won't let you move your ISA investments 'as is' to another supermarket or platform. And, worse still, FundsNetwork also refuses to offer this option for non-ISA investors when their investments total less than £40,000 - even though the other major supermarkets and platforms are all happy to do so with no minimum.
The process of transferring investments 'as is', without having to sell then repurchase, is usually referred to as 're-registration' or an 'in specie' transfer. And while all fund supermarkets and platforms are more than happy to accept ISA re-registrations from elsewhere, Cofunds, FundsNetwork and Skandia are not so obliging should you want to leave. Being cynical, there's little incentive for them to do as it increases the risk of losing business to competitors.
These supermarkets will only let you transfer your ISA elsewhere as cash, so you'll have to sell the investments then repurchase on the new platform. Not only is this inconvenient and potentially expensive if you get clobbered with a new set of initial charges, but you run the risk of your money being out of the market for a few days.
And some of those that do allow ISA re-registration away from their platform will charge you for doing so.
The FSA has said that all fund supermarkets and platforms must offer re-registration to other platforms by the end of 2012, but that's little consolation if you're stuck with a supermarket you don't like meanwhile. Annoyingly, if you find yourself in this situation then the only thing you can (aside from moaning loudly at the offending provider) is to sell the investments and re-invest the cash elsewhere (using an ISA transfer form from the new provider).
Here is where the main fund supermarkets and platforms currently stand on re-registration to other platforms:
| Supermarket/Platform | ISA Re-registration out? | Charge |
|---|---|---|
| Alliance Trust Savings i.nvest |  | £15 per fund/stock |
| Ascentric | | Free |
| AXA Elevate | | Free |
| Cofunds |  | N/A |
| Fidelity FundsNetwork | | N/A |
| Fundsdirect | | Free |
| Hargreaves Lansdown Vantage | | £24 per fund/stock |
| Nucleus Financial | | Free |
| Skandia | | N/A |
| Transact | | Free |
A final thought. Even where re-registration is allowed it can be a very slow process, sometimes taking up to two months - tedious. The platforms are apparently working with fund groups to develop an automated system that should speed this up, but I'd expect a long wait before this sees the light of day.
Read this article at http://www.candidmoney.com/articles/article194.aspx
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