Platform due diligence service launches for advisers

Platform due diligence service launches for advisers

A free platform due diligence service has launched for advisers to help them decide which providers should host their clients’ assets.

Software provider DD Hub said the service covers 18 platforms, and is centred around the Financial Conduct Authority's 2016 thematic review.

This project from the regulator reviewed due diligence processes carried out by advisory firms on the products and services recommended to retail clients

The review required advisers to evaluate both products and the providers, meaning they should judge whether to “entrust the provider with client assets”, and “whether the solution is suitable”.

The DD Hub service therefore provides advisers with general platform information, guides to client suitability by way of research filters and due diligence data.

“There are some great platform research tools already out there,” said Chris Jones, DD Hub’s director.

“But advisers asked us to add platforms to our service because they need help with genuine due diligence, not just product features – helping them check whether it’s appropriate to entrust the provider with client assets.”

The FCA’s consumer duty is set to shine a further light on advisers’ due diligence, said Jones, citing the proposed cross-cutting rule, which would require advice firms to avoid causing foreseeable harm to customers. 

The new service’s library consists of around 200 questions, covering governance and oversight, fraud and scams, and safeguarding of client money and assets, among other things.

It also contains research questions looking at details of the proposition, pricing, features and options, online services and adviser support. From these, advisers can then create their own question sets.

“We saw how difficult it was for advisers to meet the regulator’s expectations,” said David Lee, DD Hub’s director.

“[The 2016 thematic review] said they can’t rely on marketing information from providers, so we built a streamlined online system to help them, with scoring and reporting tools to evidence their compliance process. 

“Advisers can also ‘follow’ providers to get automated updates when things change, which will help them meet their Prod monitoring requirements.”

Until now, DD Hub argued due diligence questionnaires have typically been produced by advisers drawing on precedents used by others, and then emailed to providers to complete. “This is extremely time-consuming for providers, who have to complete each request individually,” the software provider said.

It also highlighted that while some providers produce standard ‘due diligence packs’ which they send on request, they often “don’t address the points an adviser is (or should be) concerned about”.