The City-watchdog has sounded the alarm on replatforming issues, urging platforms to make sure any technology upgrades they make are adequately planned and tested before they are rolled out to advisers and consumers.
In a Dear CEO letter to platforms, published today (February 6), the Financial Conduct Authority said insufficient technology resources could lead to problems for advisers and that poorly planned replatformings exacerbated this.
It said: “Insufficient investment, processes and resources for technology and operations can lead to business continuity issues with services to customers and advisers being unavailable, intermittent or restricted.
“Poorly planned and executed technology migrations and upgrade programmes exacerbate this issue.”
The regulator told platforms any change programmes should be “adequately planned” and “thoroughly tested” and that clear responsibilities were defined between the platform and any third parties to ensure issues were resolved quickly.
The warning comes after platforms were beset by a range of problems following upgrades and replatformings over the past few years.
In May 2018, advisers struggled to get income from Aegon’s platform after it merged the Cofunds platform with its in-house version.
Meanwhile Aviva’s platform was unavailable for six days after it moved to tech company FNZ in January last year, and there were ongoing issues with the new client reporting function and problems which affected payments for people in drawdown for months.
Both companies had to set aside money to compensate advisers whose service levels were disrupted by the upgrade.
When St James’s Place replatformed in 2018, clients of the FTSE 100 wealth manager were unable to access their accounts for 10 days.
The FCA also pointed to the threat posed by cyber-attacks and financial crime on clients’ assets and data as a growing concern in the platform space.
It also noted it expected the Senior Managers and Certification Regime, which was rolled out on December 9, 2019, to mean accountable individuals would be responsible for the general operational resilience of platforms.
Conflicts of interest within platform firms could lead to customers receiving poor value for money products or services, the City-watchdog warned in the letter.
It said: “We expect you to identify all potential conflicts of interest and to have processes in place to effectively manage them.
“Firms operating best buylists must construct them impartially and manage conflicts. Processes for clear selection, monitoring and deselection of funds on lists should be documented, understood and followed.”
Just last week Hargreaves Lansdown announced it would shake up its Wealth 50 buylist process, after its recommendations became embroiled in the Woodford saga when the firm kept the poorly performing fund on its buylist until the day it was suspended.
Another area of concern for the FCA was third-party outsourcing, which the regulator said created risk for firms and customers if there was inadequate governance and oversight.
The FCA urged platforms to have clear contractual arrangements and plans in place with outsourcers and to conduct reviews of arrangements to ensure the provider was performing the services to a proper standard and the risks were properly managed.
It also suggested platforms should consider if they needed to improve on the FCA’s findings from the Investment Platforms Market Study from last year, namely: making transfers between platforms simpler, providing “best execution” for day-to-day trading processes, and clearer information on costs and charges.
imogen.tew@ft.com
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