On 16 July 2018, the Financial Conduct Authority (the FCA) published its interim report on the investment platform market study (the Interim Report).
The FCA notes that the investment platforms market has almost doubled in size since 2013, accounting for £500bn assets under management and remains a growing sector. The FCA, therefore, considers it vital that competition between platforms is working well.
The Investment Management Regulatory Newsflash linked below provides a high level summary of the Interim Report.
The key points to note in the Interim Report are that:
- the FCA is considering going beyond the measures being considered by the Transfers and Re-registration Industry Group (available here) to improve end users' ability to switch between platforms by banning exit fees;
- the FCA considers that the MiFID II costs and charges requirements (available here) should address some of their concerns around it being difficult for investors to shop around and compare the costs of platforms but there is the threat of additional rules and guidance from the FCA if the industry fails to meet the FCA's expectations in implementing the MiFID II costs and charges requirements; and
- the FCA urged financial advisers and platforms to consider whether the non-monetary benefits that they receive or offer comply with the FCA's inducement rules. Similarly, the FCA said that investment platforms providing stockbroking services to retail investors could do more to consistently achieve and demonstrate best execution results for their customers. The FCA also sought views on what additional work is required to meet suitability requirements above the ongoing suitability requirement. Investment platforms and financial advisers may, therefore, wish to take steps to ensure they can demonstrate compliance in these areas as the FCA is clearly contemplating taking matters into its own hands if firms are found to be falling short of the FCA's expectations.
The FCA's five main concerns
The FCA sets out five main concerns in the Interim Report. These are set out in the Investment Management Regulatory Newsflash linked below, along with the measures the FCA is considering implementing / seeking input on between publication of the interim and final report.
To view the full summary, click here.