FCA considers forcing platforms to cut off advisers' cash

"However, a one-year period of inactivity on the account does not take into account the adviser’s service proposition or the types of solutions held.

"It is also feasible that making no active changes to a client’s products or portfolio in a one-year period is the right action, depending on the solution held and the client’s circumstances."

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A spokesman for AJ Bell said: "There is clearly a balance to be struck here in ensuring those clients who truly are ‘orphaned’ are identified and informed of their options, and recognising the importance of the adviser/client relationship.

"The FCA will face a difficult balancing act as it develops the triggers used to identify orphan clients, and we will work with the regulator to develop practical proposals in this area."

The regulator warned the problem of advisers recommending a platform, receiving ongoing charges but then failing to revisit the client's finances was growing.

The watchdog reported a 9 per cent increase in the number of orphaned client accounts between 2016 and 2017.

The regulator calculated some adviser platforms impose extra platform fees on orphaned clients, of up to 0.5 per cent in addition to their pre-existing platform charges.

The FCA estimated around 10,000 orphan clients were currently paying extra fees amounting to over £1.2m every year.

Neil Liversidge, managing director of West Riding Personal Finance Solutions, said: "Yet another example of how some at the FCA, out of sheer spitefulness, seek to insert themselves into the client/adviser relationship just for the sake of stirring up trouble.

"It's like being in bed with a woman and having Dr Ruth under the duvet telling you what to do."