I have recommended Freetrade to 2 friends - they both downloaded the app to have a play and were so impressed they decided to move their portfolios from Halifax to FT.
They filled in all the paperwork to do the transfer and sent it off to Freetrade.
So far so good - but here is where the trouble starts.
Both received this message from FT - after several months:
"We have received a valuation from your current ISA provider.
Your stock is held directly in the US (DTC) market and we are only able to accept via the GB (Crest) market. Can you please confirm if you would like the stock sold and transferred as cash or left with your current provider?"
To sell the shares and rebuy (when we are talking about £40k in one case and £100k in the other) is going to incur massive forex fees - so both people have decided to stay with Halifax.
They are both frustrated they went to the effort of filling in the forms - only to be told that some shares can not be transferred.
The other issue is whilst the transfer has been requested they cannot sell the shares on Halifax and their accounts have been locked.
I am not sure what the solution is - ideally finding a way to accept the transfer so this isn’t an issue. If this isn’t possible - maybe waiving the 0.45% forex fee for transfers in - or at a minimum making it clear before filling in the forms that shares held on the US stock market cannot be transferred?
Either way - I thought I should bring this to your attention as you have missed out on 2 significant transfers because of this - and hopefully the process can be improved!
FT doesn’t have a full stock universe so it might be that some of the stocks held are not available on FT but perhaps your friends should have checked what was possible with FT first?
I’m critical of FT in other areas but in this case I’m not sure that FT can be expected to have warnings covering every scenario - they have warned your friends at the right time ie when FT knew what stocks were held.
I was with Halifax, and couldn’t transfer as several stocks weren’t available in the FT universe. So I had to sell up and transfer as cash. The biggest cost was the Halifax £11.99 per trade, but this can’t be avoided as they charge you this even if you transfer as stock.
But I take solace in all the £11.99’s I have saved since moving over 18 months ago. With the amount of trades I’ve done on here I’ve probably saved over £1500 in fees alone
There are no fees to transfer any more - it would have been free now.
The issue is these stocks are in the ‘universe’ (Amazon…Berkshire…) - but they aren’t held on the same market - so they both assumed because they show on FT they would be able to transfer.
They thought an Amazon share was an Amazon share - and never assumed they would be held on different markets and not be transferable.
An Amazon share is an Amazon share. Amazon shares are only listed on one market. DTC is the electronic settlement system in the US and so I think it is more likely that the issue stems from the shares not being available on Freetrade as CREST is a member of DTC.
So the shares ARE in the universe and the shares ARE currently held in DTC?
That suggest the shares are not some weird and wonderful OTC stock or newly listed SPAC but more likely your Amazons, Microsoft and Alphabets of this world.
Therefore (suspect @hrochfor1 has insight into this too) isn’t it entirely plausible to transfer the shares in Halifaxs DTC account to CRESTs DTC account and have it represented in the Freetrade nominee as a CDI? Too many codes in that sentence- sorry. But the Ops monkies among us know what I’m saying!!! That’s how CDIs work, right? * So long as the securities in question have a UK listing also *
I also don’t understand why if there’s now DriveWealth sitting behind the scenes (presumably) providing custody of these assets (presumably in DTC) why a Halifax to DriveWealth transfer isn’t viable.
On that webpage it specifically states you need to send a full list of your open positions before the transfer as ONLY mutually offered securities can be transferred.
@BOOM do you know if all of the securities being transferred were offered on Freetrade as well?
Agreed. But in that instance it means if DW offer a security and DW offer virtually all US securities. If FT don’t offer the security then I agree you’re screwed. But I think we’ve established the stock(s) we’re fairly mainstream.
It is not the simple process that it should be. Every legacy broker has the incentive to make it as hard as possible to leave, and that’s what they do.
If they are forced to take down obvious barriers, they’ll replace it with something else. In my experience, hidden fees get sharper when you disclose that you want to leave.
We’re starting to see change in the UK with the current account switching service, and (hopefully) pensions soon. The specifics of your friends’ situation probably won’t be addressed for some time by the regulator, if ever.
As a starting point, I hope your friends can put any new money to work with us and see the benefit. Maybe then they will feel confident to bite the bullet and pay the exit tax their existing broker is charging. Compounding returns will make them a distant memory soon enough.
It is not the simple process that it should be. Every legacy broker has the incentive to make it as hard as possible to leave, and that’s what they do.
You guys don’t even have this functionality yet
We’re starting to see change in the UK with the current account switching service, and (hopefully) pensions soon. The specifics of your friends’ situation probably won’t be addressed for some time by the regulator, if ever.
TISA has a working group for open investments but it was somewhat slowed down by Covid. Not sure if someone else is actively working on it.
Unfortunately, both now have accounts they can’t access with Halifax and £100k plus in limbo. This has been going on for months.
If USA shares can’t be transferred in to FT should this not be made clear on the form?
At the moment the T&C’s just state if the share is in the FT Universe it can be transferred. Well this isn’t the case as AMZN and BRK.B are.
As an investor I now have 2 angry friends who wish I hadn’t recommend they switch - and it concerns me that more people will be requesting to transfer with no idea this is going to happen - wasting FT customer supports time, pissing off potential customers - and leaving their shares in limbo with the headache of trying to find out what’s going on.
I can’t now recommend anyone I know transfers their ISA to FT which is a real shame as the platform is so much easier to use than old school banking ones.
Edit: Even if Halifax is partly to blame as they seemed to have closed the account before the shares had been transferred - if they had been told from the outset USA shares with Halifax can’t be transferred they would have never started the process. I think it’s important FT are aware of the headache it’s caused regardless of who may be technically at fault.
We’re sorry about the experience your friends have had transferring their ISA to Freetrade.
Until a transfer has been completed we would not expect the other broker to close an account and we would not instruct this. We can’t disclose the details of another customer’s account, but please be assured that we’ll be working to resolve this for them as quickly as possible.
We don’t currently accept US stock transfers that are held in DTC (the US central securities depository). Currently, we only offer stock transfers through CREST (the UK central securities depository). We could have made this clearer and we’ll update our transfers page and stock list to show this going forward.
We’re also working to make stock transfers available for all US stocks on our list.
If your friends would like to contact me directly about this, please do DM me.
