The Financial Conduct Authority (FCA) is speaking to at least 1,000 investors and 30 retail investment platforms in a broad data-gathering exercise as part of its platform market study.
In a document seen by New Model Adviser® the FCA sets out the parameters of the exercise to prospective agencies the regulator would contract to gather data.
The platform market study terms of reference were set out in July. Some of the key areas of interest for the FCA were how adviser charges are impacted by the choice of platform, the impact of third-party tech providers on the platform market and whether the consumer is getting value for money from platforms.
The document setting out the scope of data-gathering states the research will focus on non-advised consumers with a suggestion the sample should be around 70% non-advised and 30% advised customers in the sample.
The FCA expects at least 1,000 retail platform investors to be surveyed.
Among the questions the FCA wants to answer with the data it is collecting is whether non-advised platforms are influencing ‘consumer’s decision-making towards specific products and/or solutions.’
New Model Adviser® understands the FCA is posing this question because it is concerned that consumers are making choices based on information given by non-advised platforms.
The research will consist of a qualitative study which will then inform a quantitative survey and conjoint analysis, a survey technique used to determine how people value product and service attributes. The whole body of research is expected to be completed by the end of January 2018.
In summary the FCA wants the research to shed light on ‘whether consumers can make good choices in the platform market and whether they drive effective competition between platforms.’
‘We want to understand the extent to which consumers are choosing platform services and products on platforms which reflect their preferences and shop around for platforms that provide value for money,’ it states.
It also wants to ‘explore the reasons for any significant gaps between consumer preferences and the choices consumers make (e.g. lack of awareness of prices and features of competing platforms, lack of engagement, behavioural biases, barriers to switching).’
The research comes at a busy time for platforms when they are preparing for the implementation of the Markets in Financial Instruments Directive II in January. However, the bulk of the work will be undertaken by the research agency the regulator has appointed.
How the agency will work with the platform companies to make contact directly with the consumers is yet to be established, New Model Adviser® understands.
The findings from the research will be published in an annex to the interim report for the platform market study, due to be published next summer.