The Financial Conduct Authority has been urged to probe the way platforms run their fund buylists amid concerns of potential vested interest.
Shaun Port, chief investment officer at Nutmeg, said vested interests between fund houses and platforms' best buylists should be investigated, while Bella Caridade-Ferreira, consultant at Fundscape, said she believes fund buylists should be regulated altogether.
The calls come in the wake of Neil Woodford’s flagship Equity Income Fund closing to investors amid liquidity concerns on Monday (June 3).
Woodford's £3.7bn Equity Income fund was suspended following a sustained period of underperformance, which prompted investors to pull £9m from the fund every working day in May.
Among the staunch supporters of Woodford were wealth managers St James's Place and Hargreaves Lansdown, the latter of which promoted the fund right up to its suspension but has taken other steps since.
SJP fired Neil Woodford as manager of the £3bn of assets he ran for its clients yesterday (June 6) while Hargreaves Lansdown pulled the fund from its Wealth 50 buylist on Monday and later cut the platform fees for clients invested in it.
Mr Port said: "The impact of the trading suspension on Neil Woodford’s Equity Income Fund is much further reaching than just one fund.
"While investors who bought the Woodford fund based on the recommendations of a best buy list are left wondering when they will be able to redeem their investments, it calls into question the broader appropriateness of best buy fund lists.
"As the Financial Conduct Authority highlighted in their 2017 study, there are concerns around links between funds on best buy lists and the platform providers as well as their performance over the long-term.
"It’s time the regulator revisited best buy fund lists and whether they are acting in the best interest of consumers."
All of the funds on the Hargreaves Wealth 50 list, that was released in January 2019, give a discount on their annual management charge to Hargreaves' clients.
Hargreaves Lansdown has long insisted that firms cannot buy their way onto the favoured funds list by offering a discount, but that both performance and the fund charge are taken into account when selecting the list.
But in the three years to January 2019, Woodford Equity Income lost 12 per cent, while the average fund in the IA UK All Companies sector gained 13 per cent.
And while Woodford's fund is on the list, others, such as the £3bn Merian UK Mid Cap fund, which returned 11 per cent during the same period, and the top performing fund in the IA Global sector over that three-year period, Fundsmith, are not.
Hargreaves benefits from receiving the discounts as it makes the total cost of ownership of the funds cheaper relative to Hargreaves' rivals, even if the rivals charge a lower platform fee.
Mark Dampier, head of research at Hargreaves Lansdown, said he doesn’t believe his firm should be criticised for obtaining discounts from fund houses, as this brings down the cost of ownership for the end clients.