FCA has published the interim findings of its market study on competition in the investment platform market. It has concluded that competition is working well for most consumers, but has identified a few areas that need attention to help consumers. It found:
- barriers to switching are significant and therefore the pressure on platforms to continue to provide value for money could be limited. FCA found 7% of consumers had tried to switch, but failed to do so;
- “direct-to-consumers” platforms do not make their fees easy to understand and therefore consumers trying to choose on the basis of price may not in fact end up choosing cheaper platforms;
- customers may get the wrong idea about the risks of model portfolios because platforms apply similar risk labels to very different portfolios. Also, information the platforms provide makes comparison difficult;
- customers may not always be aware of what they are missing out on if they hold large cash balances; and
- “orphaned” clients have limited ability to access their investments on an adviser platform once they cease receiving advice and are so paying for functionality they cannot use.
FCA understands that firms are taking steps to help consumers shop around but has still proposed a package of remedies. It is seeking feedback on them, and on specific questions it has, by 21 September and will publish its final conclusions about the market in early 2019.