Debit order Reversals/rematch on a contract buying into client accounts

If a debit order buys partly or fully into a model portfolio (a separate client account) or there is a split between 2 client accounts as in the case of the pot component system, debit order reversals and rematches works slightly different from debit order reversals and rematches where only one client account is involved (see Debit Order Reversal and Re-matching).

When a debit order is matched the cash is allocated to the default client account and the cash portion that will buy into another client account will be moved to the relevant client account. On this client account a Switch instruction will be created, which will buy into the relevant funds on this client account.

As an example see a debit order which buys into a model (non default client account) and a unitised instrument (default client account):

Recurring debit order:

Debit order matched:

A. If the debit order reverses before insurance premiums have been taken or money transfers or dealer instructions have been created, the reversal to the working portfolio will happen immediately and the Recurring Premium – Model Switch on the model client account or the switch on the non default client account (2 pot component system) will be cancelled.

Display on contract after reversal:

Should the reversed recurring be re-matched, the cash will move back to the relevant client accounts. A Recurring Premium – Model Switch on the model client account or the switch on the non default client account (2 pot component system), will however not be created again and the deposit amount will remain as cash on the model client account or non default client account.

Display on contract after re-match:

The administrator will therefore have to manually load a switch to buy the model funds on the model client account or wait for a re-balance on the model client account which will then create a switch to buy the model funds. 

In the case of a non default client account (2 pot component system), the administrator will have to manually load a switch to buy the relevant instruments.

The portion of the recurring debit order that buys into the default client account will however continue and complete.

B. If the debit order reverses after money transfers or dealer instructions have been created, the Recurring Premium – Model Switch on the model client account will change status to ‘Reverted- Buying’.

Display on contract after reversal:

The reversal to the working portfolio will only happen after the buys have been completed and the status on the Recurring Premium – Model Switch will change to ‘Reverted’.

Display on contract after buys completed:

Should the reversed recurring be re-matched, the units bought will move back to the relevant client accounts from the working portfolio

NOTE 1: Where ‘Use model splits when buying into a model portfolio’ is ticked under System->Configuration, a re-balance will not be done as part of a Debit order instruction that buys into a model. It will however still do a re-balance when the investment instruction is not a debit order instruction.

NOTE 2: On a switch instruction on a model client account resulting from a debit order, links are provided to make navigation easier to be able to see the initiation transaction and Initiating Instruction linked to the switch:

Debit order Reversals/rematch on a contract using the pot component system

A. Debit order on pot component system contract (savings component and retirement component), that buy into a model, without money transfer required

A1. If the debit order reverses before dealer instructions have been created, the reversal to the working portfolio will happen immediately and the switches on the retirement component and model client accounts will be cancelled.

On a rematch the cash moves back from the working portfolio in the correct proportion to the savings – and retirement components. The switch on the retirement component will have to be created manually or the cash will just remain in the retirement component. After the switch on the retirement component has been created, the system creates the switch into the model client account of the retirement component automatically. The switch/rebalance on the savings component model client account will also have to be created manually, or wait for a re-balance on the model client account which will then create a switch to buy the model funds.

A2. If the debit order reverse after some of the dealer instructions for the debit order have been created or completed and the client stop the buys (not recommended) on other buys that is part of the debit order, the units bought and cash remaining will reverse to the working portfolio.

On a rematch the same procedure as in A1 above will have to be followed.

A3. If the debit order reverses after some of the dealer instructions for the debit order have been created or completed, the remaining buys will complete after which the reversal to the working portfolio will take place.

On a rematch the units will be reversed back to the relevant savings – and retirement components and related model client accounts in the correct proportions.

B2. If the debit order reverses after a money transfer for the debit order has been created or completed and the client stop further money transfers (if applicable) or buys (not recommended) that is part of the debit order, the units bought and cash remaining will reverse to the working portfolio.

On a rematch the same procedure as in B1 above will have to be followed.

Last Updated on 3 weeks ago by Antoinette Van Meyeren