FCA urged to act on platforms holding interest

"The final report for this study is due later this quarter, and I wouldn't be surprised to see platforms being told to improve the disclosure to the end customer so that they are able to make informed choices."

Doug Brodie, managing director at advice firm Master Adviser in London, said: "If you hold Vodafone shares in your Sipp and the share rises in value, whose profit is that?

"Is the platform entitled to take part of that profit? When Vodafone pays a dividend it goes into the Sipp cash account – that cash is deposited with (a bank) who then pay interest on it.

"It is your Sipp. It is your individually numbered Sipp bank account. Whose cash is it in the bank account? Whose interest is it?"

Mr Brodie said platform customers he spoke to appeared "completely unaware" that the business kept some of the interest earned on their cash.

Alistair Wilson, Zurich's head of retail platform strategy, said his business currently retains 0.1 per cent of the interest from banking partners and passes on the rest to the client.  

He said: "We make this fully transparent to clients and advisers and will also be including it in our costs as part of the forthcoming Mifid II disclosure rules.

"Unlike some other platforms, we do not require advisers to hold a minimum level of their client money in cash in order to meet client income payments, platform fees, and adviser charges.

"This means that, where appropriate, clients can be fully invested, without being obliged to hold part of their portfolio in cash."

Zurich stated the firm alerted clients of the practice in "six different ways" including in the charges information documents.

Ascentric meanwhile confirmed that all of the interest on a client's funds went back to the client. It declined to comment on the cost it incurs from holding this cash.

A representative of Standard Life said: "The management of cash holdings is treated in the same way as any other holding on our platforms and is actively managed by us.

"As a result of this we retain an element of the interest, treating it as a cash management charge."

The platform described the retention of interest as a "cash management and administration charge."

The Financial Conduct Authority (FCA) said it had nothing to add to the statements contained in the platform market study.