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FCA kicks off wide-reaching platform market probe

Another focus of the Investment Platforms Market Study, which the former FCA technical specialist Rory Percival highlighted to Professional Adviser last week, is whether or not challenger platforms and similar firms struggle to compete as customers and advisers face barriers to switching, and the potential effects of these on consumer choice.

Launching its study the Financial Conduct Authority (FCA) said that platforms can "add value through the way they provide access to investment products and exposure to markets", but added it wanted to ensure platforms "use their bargaining power to negotiate good deals for investors".

"We will assess whether investors and advisers can assess the value for money of investment propositions, including investment products and platform services, from the information platforms make available", the FCA said in a statement on Monday (17 July).

The new review follows the FCA's completion of its study into fund managers where it is pressing ahead with plans for an 'all-in" fund fee in a bid to tackle, what it described as "weak' price competition.

It also wants to ensure the "model portfolios" being offered by platforms and whether these are benefiting consumers.

The FCA says: "We will investigate whether complex, high-risk products are used to construct portfolios with various risk levels and the amount of fund flows into these products".

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Many platforms offer investors and their advisers a range of information and tools to help them make investment decisions and some also offer their own investment products.

The market study was first trailed the FCA's asset management market study. "The FCA will assess whether these relationships work in the interests of investors".

The study will try to identify "any persistently over and underperforming" portfolios on a gross and net basis, relative to their objectives.

Noting platforms form "one part of the value chain, alongside asset managers, other product providers and financial advisers, the regulator added: "We will seek to understand whether other parts of the value chain affect the willingness and ability of platforms to compete in the interests of consumers".

The regulator will publish an interim report on the platform market in the summer of 2018.

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