The FCA is to review how advisers choose their platform and whether platforms are competing to attract advisers rather than improve client service.
The regulator has published its terms of reference for its platforms market study, which will look at whether platforms aid good investor decisions and whether they offer value for money.
The market study was first trailed the FCA’s asset management market study.
The FCA says advised platforms account for greater assets under administration compared with non-advised platforms, and suggests advisers’ preferences are likely to be a key factor in platform choice.
It wants to investigate the impact this on competition, and question whether adviser platforms are competing in the interests of the end investor.
The regulator argues platforms that are competing to win adviser business through tools and service may end up resulting in better client service.
But it says: “Consumer harm may arise if the interests and choices of the adviser and investor are not aligned.
“To understand whether advised platforms compete in the interests of the end investor we will assess the factors which determine why advisers choose a platform on behalf of their clients, the access platforms allow consumers, any restrictions they impose and the reasons for these.”
The FCA will also examine how adviser platforms deal with orphan clients.
The regulator adds: “We want to assess the impact advisers have on platform costs and quality, understand whether the benefits advisers secure from their platform are passed onto investors and how use of a platform has affected adviser charges.
“Considering these factors should enable us to draw conclusions as to the impact adviser firms are having on the platform market, how platforms tailor their offering to advisers and whether this is resulting in effective competition in the interests of consumers.”
Feedback to the terms of reference should be submitted to the FCA by 8 September. The regulator plans to publish an interim report by summer 2018.