The FCA is launching a market study to investigate competition between platform providers.
In its business plan released this morning, improving competition in the platform space was placed as one of the regulator’s priorities in the retail investment space.
The study will consider both the direct to consumer and advised platform market, as the FCA warns that ”some self-directed investors are at risk of receiving products inappropriate for their risk appetite and capacity or receiving poor value for money.”
The FCA says that, on the back of its market study into the wider asset management space, competition issues had been raised over platform performance, including complex charging structures, whether platforms enable effective choice with their investment tools, and if they are able to compete to lower asset management charges.
The regulator says: “We will conduct a market study to explore how ‘direct to consumer’ and intermediated investment platforms compete to win new and retain existing customers. The study will explore whether platforms enable retail investors to access investment products that offer value for money. When scoping the study, we will take into account relevant feedback we receive on the Asset Management Market Study.
“The investment platform market study will allow us to understand the causes of any competition problems in this market and assess what we can do to improve competition between platforms and improve consumer outcomes.”
In November, Fund Strategy sister publication Money Marketing revealed that the regulator had also held talks with a number of platform bosses regarding the potential risks of replatforming projects.
The FCA acknowledged that replatforming posed a risk to some customers in its sector view on pensions and retirement.
It says: “Some insurers are shifting to capital-light asset management business models. In some cases this involves new online propositions and re-platforming. This may involve bulk transfers of customers to new propositions, which carries the risk that some customers may lose out as a result.”