The FCA’s platform market study will help to put an end to platforms’ “creative ideas” to get around regulation, Standard Life adviser and wealth manager propositions head David Tiller says.
The terms of reference for the market study were published in July, revealing the FCA will look into whether the benefits advisers get from platforms are passed onto investors and how platforms have affected adviser charges.
Vertical integration and the commercial relationships between platforms, asset managers, discretionary fund managers and advisers are also a focus of the review, which the FCA says could “distort competition”.
Speaking to Fund Strategy sister publication Money Marketing ahead of the provider’s results tomorrow, Tiller acknowledges there are businesses that have found ways around the regulation.
He says: “One of the outcomes of this paper is when there have been creative ideas about trying to get around the core principles, which have been set out by this regulation, they will be closed down.”
Tiller adds: “The nature of regulation is that it is difficult to be all encompassing of everything. The letter of it can still leave opportunities for things to be less than transparent, less than clear to the customer and not necessarily putting the customer’s interests at the fore. One of the consequences of the paper is that it will be much harder to find ways around it.”
He adds that the paper highlights some of the “implicit contradictions” in the market, particularly around vertical integration.
Tiller says: “We have a job to make sure that as an industry we help the regulator come up with answers. The wish for choice versus customer outcomes and potential value through vertical integration because it can be cheaper but then the client has less choice. That really comes through in the paper. There is a tension between the two things.”
He adds: “There is a sense the regulator is looking at the whole package now. If all you are doing is moving money from one bit of the value chain to the other it is not really getting through to the customer. The cheapest is not always the best but the customer has got to get value.”