Fund supermarkets still have an advantage over smaller platform providers despite the impending legacy rebate ban, according to Ernst & Young (E&Y).
Shaun Crawford, global insurance leader at E&Y, said platforms needed to build scale to ensure they made profits in the future.
He argued fund supermarkets’ legacy issues were offset by their size and bargaining power.
‘These organisations that have scale with large back books have the bargaining power,’ he said. ‘[They] have the assets to have conversations and leverage deals with other companies.
‘To make a margin and a profit, platforms need scale to invest. Lots of platforms are relatively small, so to invest and develop wider propositions is very tough, especially with UK compliance costs.
‘There is lots of innovation, but to develop and invest, you need scale and that is the challenge,’ said Crawford.