The FCA has reignited concerns about adviser charging, and outlined plans to address competition issues in the platform market, as it set out its priorities for the year ahead.
The regulator’s business plan and sector views, both addressed the issue of adviser charging. In the latter, the watchdog said: “relatively few advisers are transparent about their pricing before they sell advice.
“This does not incentivise advisers to compete on price, and this may result in limited pressure on them to reduce their charges.”
This was echoed in its business plan, which claimed: “financial advisers may give insufficient attention to the total cost of investment products and of advice, which results in poor value for money for consumers”.
Simon Webster, managing director at Facts and Figures Financial Planning, said the regulator should focus on issues such as PPI and pensions mis-selling.
Mr Webster said: “The FCA is worrying about three basis points rather than things where clients can lose a lot of money.”
Following on from its asset management market study – the final result of which is due out this summer – the regulator has also revealed plans to conduct a market study on direct-to-consumer and adviser platforms in order to explore whether they would be able to “enable retail investors to access investment products that offer value for money”.
It aims to improve competition, rectify complex charging structures, enable platform investment tools to promote effective choice and ensure that incentives are in place to put pressure on fund charges.
“We have issues explaining [platform charges] to our own clients. What chance does someone have coming to it cold,” said Jeremy Edwards, partner at Melton Mowbray-based Martin-Redman Partners.
Mr Edwards also suggested that some platforms tended to offer discounted prices only when they could guarantee distribution. He said he had stopped using “one of the big platforms” because it had offered him discounted funds on the basis that he placed £10m of money with it that year.
craig.rickman@ft.com
