FCA Interim Investment Platform Market Study: comment

by | Jul 17, 2018

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Commenting on the FCA’s report into investment platforms are a number of leading voices:

Kevin Russell, proposition director at SEI Wealth Platform, said: “This provisional paper emphasises just how crucial technology is to the success of platforms going forward in delivering good customer outcomes. A key takeaway within that is the regulator’s views on how the industry needs to tackle challenges around disclosure and transparency. Going forward, whatever the regulator can do to facilitate an environment where innovation is encouraged to tackle recognised issues should be welcomed and encouraged.

“In terms of the model used to power platforms, it has long been clear that outsourcing technology is already the most popular choice when it comes to the UK platform market, with almost three quarters opting for that over proprietary technology. We don’t see this changing, and indeed new entrants to the market continue to offer an ongoing opportunity for those of us already in the market to enhance solutions for advisers and clients through partnerships and integration to deliver new and innovative solutions.”

“Nonetheless, solutions need to deliver positive outcomes for consumers and advisers, and the report also makes it clear that those businesses which do not take technology seriously by making the necessary ongoing investments risk causing customers detriment, for example by causing delays when it comes to trading portfolios. Therefore, selecting partners with the capacity to deliver ongoing investment in platform service through technology continues to be vital.”

Anthony Morrow, chief executive of evestor, said: “Too many providers hide behind a confusing myriad of prices and charges that makes it almost impossible for customers to compare costs and establish if they’re actually getting a good deal.

“So the FCA’s review is welcome, especially its focus on whether platforms really offer investors value for money in general, and its specific proposal to ban exit fees.

“But its recommended remedies are unlikely to bring an end to rip-off fees any time soon, mainly because what constitutes ‘value for money’ is very much in the eye of the beholder.

“For example, the  FCA found that over a quarter (29%) do not know whether they pay platform charges or what they pay, and the majority cannot estimate charges, so how can customers possibly know they’re getting a good deal?”

Justin Blower, Head of Sales and Marketing of Ascentric, said: “It is encouraging that the FCA has recognised the important role of platforms in the value chain and the benefits they can deliver.  However, the nature of the platform market, with its diverse range of models covering both adviser-facing and direct to customer platforms, has highlighted that there is no “one size fits all” assessment.

“For the most part, the market does deliver benefits but there are areas where it may not be working in the best interests of the end customer.  Some of the findings on the lack of transparency around costs and charges help to reinforce Ascentric’s decision to move to all-in simplified pricing, making it easier for advisers and their clients to understand the total cost of investing without having to worry about any hidden extras.

“We will now review the detail of the Report’s findings and engage further with the FCA to ensure this market truly delivers the benefits it is intended to provide.”                 

Richard Withers, head of policy at Vanguard, said; “the report makes clear that the investment industry has a responsibility to improve the ability of platform users to make informed investment decisions and help consumers get a fair deal. Otherwise, the FCA has intimated they are prepared to take further action.”

“Currently, comparing platform costs can be challenging for even the most sophisticated investor. We continue to support the FCA’s call for greater innovation in the way that firms draw attention to costs and charges. Presenting charges in a clear, understandable and prominent way can increase the attention investors pay to charges.”

“Our own independent research has also found that people are less likely to take the step of switching their investment provider than they are switching their provider for home insurance, gas or electricity, despite the potential savings being higher. The FCA report is further evidence that this is significantly influenced by a lack of investor understanding of the true cost of investing, and the impact of costs on returns, as well as the view that switching is too much hassle.”

“We welcome the FCA’s support for the strengthening of minimum standards for transfer and re-registration times – for too many investors the process currently takes too long. However, there is more that can be done and we would support a ban on unjustified exit fees charged by platforms”

“This report is a warning to the platform industry that, while the market is working well in many respects, there is more to be done to ensure that investors get a fair deal. There remains an opportunity for further innovation and improvement. A more competitive, transparent and efficient investment platform market will benefit savers, investors, and the industry itself.”


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