FCA details plans for investment platforms probe

Paterniano Del Favero
Luglio 17, 2017

The platform market has grown rapidly in recent years, handling as much as 500 billion pounds ($650 billion) of assets under administration last year, up from 108 billion pounds in 2008, the FCA said.

However, the FCA said the relationship between providers, asset managers and financial advisers had the potential to distort "competition by encouraging platforms to compete in the interests of those with which they have commercial relationships rather than in the interests of the consumer".

"To provide investors access to retail investment products and information about these products, platforms interact with other platforms, advisers, asset managers and fund ratings providers".

In addition, the FCA intends to assess the competition between different platforms and brokerages, as well as seeing who can offer the clients a better deal.

Published today (17 July), the terms of reference for the Investment Platforms Market Study sets out the scope and topics the FCA will be pursuing.

"With advised platforms", it added, however, "the consumer may not directly engage with the platform and may instead pay their adviser, through the adviser charge, to deal with and manage their investments through the platform".

In either case, the FCA argued, it was likely an adviser's preferences would be a key determinant in the selection of the platform and the study would therefore explore the impact this has on competition between platforms by exploring the question "Do adviser platforms compete in the interests of the end-investor?"

The City regulator has announced a review of online fund supermarkets to ensure the investment platforms they are helping investors make good financial decisions and are value for money.

"Platforms have the potential to generate significant benefits for consumers and we want to ensure consumers are receiving these benefits in practice".

"In principle, platforms allow retail investors to pool their money and achieve better investment returns", it continued.

The FCA will also explore if chosen products meet investors' expectations by analysing how platforms communicate with investors.

The regulator is inviting feedback by September 8, with a view to publishing preliminary conclusions and remedies by the summer of 2018.

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