Investments  

GBST and FNZ merger probed by watchdog

GBST and FNZ merger probed by watchdog

The competition watchdog is looking into the merger of two platform tech companies over concerns the combined firm will lessen competition in the UK market.

The Competition and Markets Authority opened its investigation today (November 11) into FNZ’s binding agreement to take over GBST — two of the three major tech providers for UK adviser platforms.

FNZ agreed to acquire GBST in a deal worth £220m in July of this year, prompting concerns it could create a situation where a lack of competition could lead to inflated costs for platforms.

The number of companies involved in back-office platform technology is relatively small, with GBST, FNZ and Bravura currently providing the technology for 71 per cent of the assets under management in the platform space, according to investment bank Liberum.

Pershing, another firm, accounts for 1 per cent while the remaining 24 per cent of assets under management are held on platforms which have their own in-house technology.

The enforcement order made by the CMA will press pause on any action by GBST and FNZ to integrate their businesses as they have now been banned from pursuing anything which will impair the firms’ individual abilities to compete independently.

The FNZ-GBST deal would see the combined business have more than half (52 per cent) of the marketshare of all platform assets, prompting Liberum to argue earlier this year the deal would “greatly impact” technology provision in the industry and competition between providers.

But Ben Hammond, principal consultant at Altus, said he thought a combined GBST and FNZ could actually be a positive move for the industry.

He said: “In general, I think it will be a good thing. It will make people nervous but overall, knowing the firms and how they operate, I think it’s likely to be a good thing.”

This was partly down to the fact the firms had different strengths when it came to technology so the combined effort would improve innovation in the industry and result in lower charges for advisers.

He added: “FNZ, GBST and Bravura might be the really big players but there are others out there.

“If they ramped up their fees it would be shooting themselves in the foot. They’ve also got to think of their existing clients, like Aegon, who probably wouldn’t be happy if they were suddenly charging more.”

Platforms have faced a series of woes caused by re-platforming and upgrading issues in recent months.

Clients on the Aegon Cofunds platform began to face wide-ranging problems after a botched replatforming exercise which started on the May bank holiday weekend last year while the Aviva platform also saw a myriad of issues over the past few years.

Industry experts recently said the whole platform sector was being held back because platforms were struggling to “do the basics”.

imogen.tew@ft.com

What do you think about the issues raised by this story? Email us on fa.letters@ft.com to let us know.