Investment platforms: who pays and who benefits?

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Investment platforms: who pays and who benefits?
ByMike Barrett

If you are a fan of Financial Conduct Authority (FCA) consultation and market study papers, the last month has been like your best ever Christmas, birthday, Easter and Father’s/Mother’s Day all rolled into one. The FCA awoke from its post-purdah slumber a few days after the 21 June election with its DB Transfer Consultation Paper.

The Asset Management Market Study final report, MiFID II final policy statement and Retirement Outcomes Review interim report all followed within a matter of days, unleashing a migraine-inducing 463 pages of reading on the industry. And as any true fan will tell you, you have got to read the supporting documents to get the full picture, and that is another 1,400 pages of regulation to wade through. Surely that would be enough to see us through the summer months? 

Market study

The answer was no. On 17 July the FCA set out the scope for its Investment Platforms Market Study with the publication of a terms of reference document (taking the page count to 497, if you are counting). This paper marks the first stage of a market study into the world of platforms with an industry consultation open until 8 September this year. The FCA then aims to publish an interim report by summer 2018 which will set out preliminary conclusions and any potential remedies to address any concerns it might uncover.

The relatively gentle timeline of this work is probably a good indicator of just how concerned the FCA is with platforms and all those who use them. It is very clear that it is coming at this work from the point of view of wanting to create a more competitive market, as opposed to having concerns of any obvious consumer detriment.

Launching the study, Christopher Woolard, executive director of strategy and competition at the FCA, said: “With the increasing use of platforms we want to assess whether competition between platforms is working in the interest of consumers. Platforms have the potential to generate significant benefits for consumers and we want to ensure consumers are receiving these benefits in practice.”