UK Regulator to Probe $650 Billion Investment Platform Market

Xavier Trudeau
Juillet 17, 2017

"The potential to distort competition" in the platform market is a key focus of the Investment Platforms Market Study, wide-ranging terms of reference for which the Financial Conduct Authority (FCA) published today.

These platforms provide clients and advisors with data and tools in order to make more informed investments.

The FCA is set to investigate whether model portfolios and multi-manager funds offer value for money to clients as it publishes its terms for a probe into the platform sector.

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.

Noting platforms form "one part of the value chain, alongside asset managers, other product providers and financial advisers, the regulator added: "We will seek to understand whether other parts of the value chain affect the willingness and ability of platforms to compete in the interests of consumers".

But it says: "Consumer harm may arise if the interests and choices of the adviser and investor are not aligned".

The new review follows the FCA's completion of its study into fund managers where it is pressing ahead with plans for an 'all-in" fund fee in a bid to tackle, what it described as "weak' price competition. The study will look at both investment platforms and firms that provide similar services by allowing investors or their advisers to access retail investment products through an online portal.

Christopher Woolard, executive director of strategy and competition at the FCA, said: "With the increasing use of platforms, and the issues raised by our previous work, we want to assess whether competition between platforms is working in the interest of consumers".

In addition to affecting the competitive dynamic between platforms, the FCA suggested financial advisers could also determine the extent to which consumers receive "the benefits of competition between platforms" and so another question the study will address is "Do advisers have a positive impact on the cost/quality of the platform and are these benefits passed through to investors?"

Interested parties need to send their views to the FCA by 8 September with an interim report scheduled for summer next year.

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