Adviser platform Transact has criticised the approach some other platforms have taken towards cash handling and the use of cash interest.
Jonathan Gunby, CEO of Transact, said: “As interest rates rise you will have seen many more reports on the different approaches platforms are taking with client cash. One platform recently reported profit of £24m from their clients’ cash alone.”
Quilter cut its platform charges for new customers from this month and will be reducing charges for existing customers in Q3.
Transact said in its most recent adviser update that it plans to continue to pass all interest on to clients.
Mr Gunby continued: “Our approach is different. We think that it is wrong to skim client interest – this is an investment return just like a dividend or distribution – and so we pass on all interest to clients for (instant access) pooled cash held on Transact. The current rate (as at the end of May) is the equivalent of 4.0058% pa. At the time of writing, this is probably the highest rate among investment platforms and provides a much better consumer outcome.
“The average portfolio with Transact is valued at around £235k, has 6.49% invested in cash and is earning around 4.01% per year. This equates to a yield on the entire portfolio of 26bps. This is greater than the 24bps revenue yield Transact earn. So an incredibly positive consumer outcome, one of the standards the Consumer Duty rules aim to deliver.”
Integrafin, parent company of platform Transact, suffered a near £4m fall in IFRS pre-tax profit in the half year to 31 March as it was hit by rising costs and adverse markets.
In its half year results the company said that despite the setback it notched up record platform client numbers of 228,000, up 4% year on year. The total number of adviser clients of Transact also rose from 7,356 to 7,563.
Net platform inflows fell from £2.7bn in the first half in 2022 to £1.6bn this year and total group revenue dropped slightly from £67m to £66.5m.
