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FCA to launch platform market study

FCA to launch platform market study

The regulator will launch a market study of adviser platforms to investigate whether provider are helping consumers get value for money.

The announcement was made in the Financial Conduct Authority’s (FCA) Business Plan for the coming year.

In the document, the FCA referenced findings from its November 2016 It found that although retail platforms can secure discounts on fund charges, this practice is not widespread, and that ‘it is not clear that retail investors benefit fully from the economies of scale available to platforms’.

The FCA blamed ‘poor competitive pressures’ on the demand side for a ‘clustering’ of prices in various areas of the platform sector.

It said: ‘The interim report for the asset management market study identified a number of potential competition issues in the investment platforms market. These included: complex charging structures, if platforms’ investment tools enable effective choice and whether platforms have the incentives and ability to put competitive pressure on asset management charges.

‘We will conduct a market study to explore how “direct to consumer” and intermediated investment platforms compete to win new and retain existing customers.’

The study will explore whether platforms enable investors to access value for money investment products.

When deciding the scope of the study the FCA said it will take into account relevant feedback already received as part of the asset management market study.

‘The investment platform market study will allow us to understand the causes of any competition problems in this market and assess what we can do to improve competition between platforms and improve consumer outcomes,' the FCA said.

In a separate paper published today, called Sector Views, the FCA said it will undertake further competition work on the retail distribution of funds, ‘particularly in relation to the impact financial advisers and platforms have on value for money’.

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