Platform exit charges may inhibit competition

Outlining findings from a thematic review into preparations for its new platform rules, the FCA director of long-term savings and pensions said he would not want the charges to “get to a level where they became a barrier to exit for customers”.

The rules come into force on 6 April and include a ban on cash rebates by product providers.

While claiming that platforms had generally made “good progress” towards implementing changes to their charging structures, Mr Poyntz-Wright said further focus was needed in the area of re-registrations.

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He said: “We expect firms to facilitate the transfer of investments from one platform to another in a reasonable time. We found more limited progress in this area than we expected.”

He added that providers also needed to ensure they “had a plan B to fall back on”, with limited evidence of firms thinking about contingency plans and what they would do if problems arose with their change programmes.

Mr Poyntz-Wright also warned that customers should be treated fairly, while advisers could play a “key role in ensuring customers understood the new rules”.

Tobin Ashby, an insurance lawyer at City law firm Pinsent Masons, said: “In the context of exit charges becoming a barrier, we may yet see more activity from a regulator trying to improve the ease with which customers can transfer their assets between platforms.”

Key points

■ Platforms should make more progress on re-registration.

■ Exit charges should not get to a level where they become a barrier to exit.

■ Providers have to ensure customers fully understand the rule changes and their impact.

■ Platforms should implement contingency plans for the changes.

Adviser view

Keith Macdonald, certified financial planner for Worcestershire-based Broadway Financial Planning, said: “Our business was already in pure asset classes with no rebates, but we had to explain the changes to clients, and clients should have the freedom to move where they want with minimum hassle.”