Today the FCA has released the Investment Platforms Market Study, Final Report. Here is some of the feedback coming into the IFA Magazine office.
Overall it finds that the market is working well and platforms helps consumers make informed decisions.
Transfers and STAR
Tom McPhail, Head of Policy: “The FCA has made it very clear to the industry it has to collectively put its house in order, or face further regulatory intervention and censure. This issue presents unique challenges, given firms’ dependence on counterparties to cooperate in executing customers’ instructions.”
“Through a working group of ten trade bodies representing the whole financial services ecosystem, the industry has created a set of common standards to deliver faster transfers and better customer communication. This is the STAR project referred to in the FCA paper. Hargreaves Lansdown, along with a growing number of other leading platforms and product providers has already committed to this framework.”
“Our goal is to be able to routinely execute transfers in a matter of hours, rather than the days or weeks it still too often takes at the moment. All firms that have an interest in the transfer of customer assets should join us in signing up to the STAR initiative.”
Hargreaves Lansdown’s Tom McPhail chaired the industry working group (known as TRIG) over the past two years and is the chair of the STAR Governance Steering Committee
Chris Hill, CEO, Hargreaves Lansdown: “Overall the FCA has reviewed the platform market, kicked the tyres and found them in good shape, the market is working well and helping consumers enjoy good outcomes. They recognise the good that the market is doing and how larger platforms can use their scale to negotiate discounts on funds and provide a broad range of services which clients value.
“The FCA acknowledges that firms bear costs when clients switch platforms as the majority are still done on a manual, per-line-of-stock basis. We are pleased the FCA’s will look to apply restrictions to exit charges across the wider retail distribution market, as singling out platforms would distort the market in favour of insurance companies and other wealth management services. Consumers will benefit as the industry continues to work together to automate and improve the transfer process and we will continue to play a leading role in this process.”
Jackie Boylan: “Good news for investors. The FCA’s recommendations in the Investment Platforms Market Study are encouraging and the regulator recognises that the platform market is working well in many respects, with high customer satisfaction.
“There’s no mediocre measures from the FCA today, with a proposed ban on exit fees, rather than a cap. We do not charge exit fees so we welcome the FCA’s focus on ensuring that consumers are charged reasonably without penalties for transferring their assets.
“We are very supportive of the FCA’s attention on ease of switching between platforms and believe that overall this happens relatively seamlessly between platforms, but we do need to apply focus on all firms offering retail distribution services, not just platforms.”
Adrian Lowcock, head of personal investing: “Exit fees have been an ongoing problem for investors, trapping them in services they no longer want or need. Investors are rarely told what the exit penalties are when they join a platform and are clearly put off transferring to a new platform when they find out about them.
“We have long been a supporter of no exit fees and greater transparency, which is a fundamental principle behind the Willis Owen Platform. However, while this is a positive move in the right direction, a ban is only the first step. More work needs to be done to remove the confusing jargon and different terminology for fees and charges across the industry.”
Nick Blake, Head of Personal Investing: “We welcome the FCA’s efforts to improve competition in the investment platforms market. A more competitive investment platform market, that drives down costs and makes it easier to shop around for the best products, will be better for investors and investor returns.
“We support the FCA’s decision to look at making transfers more efficient. Our own analysis shows switching between investment providers remains too complex and time consuming. Therefore, we believe that transfer times should be shorter and we advocate a mandatory time limit for organisations to complete each of their steps during the transfer process.
“We are equally strong supporters of the FCA’s further consultation on exit fees. We believe a total ban would be appropriate. Fees penalise consumers and only serve to deter them from switching investment provider.
“The Platform report is a step in the right direction to help more people save for their future. More must be done to encourage people to save and ensure they have access to a fair deal.”
Find a copy here.