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Regulator to probe investment platforms

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Written by: Paloma Kubiak
17/07/2017
The financial regulator has launched a study of the growing investment platform market to assess whether they offer investors value for money.

Platforms allow investors to buy and sell investment, plus offering information and tools to help them make financial decisions. Some also offer their own investment products.

The assets held on investment platforms has steadily grown over the last eight years, with assets under administration (AUA) for both adviser and direct platforms increasing from £108bn in 2008 to £500bn in 2016.

The Financial Conduct Authority (FCA) has today launched a study into online investment platforms to explore whether they help investors make good investment decisions and whether they offer value for money.

The FCA will look at how platforms compete and whether they use their bargaining power to get investors a good deal.

It will also look at how platforms interact with other platforms, advisers, asset managers and fund ratings providers to check these relationships “work in the interests of investors”.

It follows a recent asset management market study which highlighted a number of potential competition issues in the platforms sector.

Christopher Woolard, executive director of strategy and competition at the FCA, said: “Platforms have the potential to generate significant benefits for consumers and we want to ensure consumers are receiving these benefits in practice.”

‘Platforms have an important role to play’

Tom McPhail, head of policy at Hargreaves Lansdown, said: “The FCA has set a very broad scope for this study; the terms of what constitutes a platform can include online portals, life insurance companies, wealth managers and banks; in effect any organisation providing a retail investment service is likely to come under scrutiny.

“This study recognises the vital service platforms now provide to millions of people, helping them to save and invest for their future. The advice gap remains and platforms have an important role to play in delivering guidance and support to investors, many of whom need help if they are to invest with confidence.

“Platforms can also bring pressure to bear on asset management costs, negotiating discounts for investors, promoting good funds and highlighting poor performers. As with the asset management study, this paper is not simply about the price charged by retail investment service providers, it is about the value they deliver to investors.”

The interim findings will be published in summer 2018.

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