The watchdog will investigate whether platforms help investors make “good investment decisions” and whether the financial solutions offered provide “value for money.”
The platform market has steadily grown over the last eight years, with Assets Under Administration for both adviser and direct platforms increasing from £108bn in 2008 to £500bn in 2016. The FCA will look at how platforms compete “in practice” and whether they use their bargaining power to get investors a good deal.
The study will cover:
• platforms and other firms that offer access to retail investment products through an
online portal. This is likely to include financial advisers, wealth managers and other
distributors.
• retail investors who access retail investment products through an online portal
• intermediaries, including financial advisers and wealth managers who use
intermediated platforms to access different retail investment providers on behalf of
their clients
• product and wrapper providers who use platforms to distribute their products
• technology providers to whom platforms outsource services, and
• fund ratings and data providers whose information platforms use and distribute
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The study will also review the “commercial” relationships between advisers and platforms and their influence on overall charges.
The regulator says: “The FCA will assess whether these relationships work in the interests of investors.”
The FCA is taking a broad approach to what constitutes an investment platform, it says, and the study will look at both investment platforms and firms that provide similar services by allowing investors or their advisers to access retail investment products through an online portal. It will look at increasingly popular ‘model portfolios’, for example.
This Market Study follows on from the Asset Management Market final report published in June 2017, which highlighted a number of potential competition issues in the platforms sector.
Christopher Woolard, executive director of strategy and competition at the FCA, said: “With the increasing use of platforms, and the issues raised by our previous work, we want to assess whether competition between platforms is working in the interest of consumers. Platforms have the potential to generate significant benefits for consumers and we want to ensure consumers are receiving these benefits in practice.”
The FCA welcomes feedback on the topics it will explore by 8 September. It aims to publish an interim report by summer 2018 which will set out preliminary conclusions and any potential remedies to address concerns.