The Financial Conduct Authority has said it is “disappointed” in platforms’ progress on re-registration and has warned operators that it wants to see further progress, including on areas such as disproportionate exit fees that act as a barrier to transfers.
In its review on implementation on platform rules, published today (3 March), the FCA said firms must be able to transfer a consumer from one platform to another in a reasonable timescale.
Nick Poyntz-Wright, FCA director of long-terms saving and pensions, said on re-registration: “We found more limited progress on this area than we would have expected so we want firms to attend to that.”
He was also critical of exit charges, warning that the regulator does not want them “to get to a level where they might present a barrier to exit for the consumers and inhibit competition more generally in the market.”
Exit fees on self invested personal pensions recently came under fire, with Martin Tilly, Dentons Pensions’ director of technical services, telling FTAdviser last week that the firm has seen evidence of clients being faced with fees of £800 per asset for in-specie transfers.
The FCA’s review was conducted on 10 operators which collectively make up 75 per cent of the market and was conducted ahead of the new platforms rules which are set to come in on 6 April 2014.
While the review found that platforms appear confident they will be ready for the April cash rebate ban deadline for new business, the FCA warned platforms that ‘orphan clients’ should be another area of focus.
In particular, the regulator wants platforms to treat all customers fairly, including “previously advised consumers”. The FCA said that some clients who have relied on an adviser may find themselves without one and they may have a problem accessing their investments.
Mr Poyntz-Wright said: “These clients should not be disadvantaged compared to other consumers.”
The FCA was also concerned on contingency planning as “it did not see as much focus at it would have expected”.
Although the regulator said it saw “robust projects”, “little thought was given to ‘Plan B’”. The regulator said that considerations need to given to, for example, consumers not responding as predicted and technology not working.
Mr Poyntz-Wright said: “Advisers can play a key role in making sure these changes work effectively for their consumers.
“It’s important they work closely with platform operators to make consumers understand what charges are being made, what options are available to them.
“Some may be affected with a choice of clean share classes so expect their advisers to help them understand what this means and to direct them on the best action to take.”
