FSA prepares visits to platform-using advisers

The Financial Services Authority (FSA) will be carrying out assessments of advisers using platforms in order to fully review the effects the technology has on firms and their clients.

Reviews of a cross-section of firms starting in Q2 this year follows the publication of the feedback to the regulator’s platform discussion paper that was published alongside the retail distribution review in June 2007.

The regulator is still concerned about a number of potential risks that platforms could bring for consumers, including increased complexity and costs without value added in return. The FSA will also look at whether using particular platforms creates a conflict of interest for advisers and whether they have the correct competence to provide the level of investment advice that they are offering through a platform.

The feedback also confirms that no prescriptive rules will be created for platforms and they will continue to be assessed on a principles-based basis. The FSA believes that rules would quickly become out-of-date because the industry is still changing. 

Dan Waters, director of retail policy and themes at the FSA, said he was pleased with the level and quality of responses received. 

'We believe that our principles-based approach to platforms, favoured by the industry, is appropriate – this gives firms discretion over how they approach platforms, and in a way that treats customers fairly, in line with their own business models,' he said.

‘However, we are anxious that firms place customers at the heart of their operations when using platforms, and we are planning follow-up work with platform providers and intermediaries to ensure that this is the case.’

The regulator received 62 responses to the discussion paper from a wide range of firms, including Baigrie Davies, Scottish Widows, 7IM and Towry Law.