Some investment platforms are not helping asset managers and advisers meet their Mifid II obligations by passing data back and forth, it has emerged.
As part of the target market rules - which are part of the product governance regime (PROD) introduced in January by Mifid II - manufacturers must specify a target market for their products and advisers must tell them when they are not selling them into those markets.
This means information about this will need to be passed back and forth between fund managers and advisers, prompting questions about the role of platforms.
A number of figures in the industry have said there has been an uneven response across the platform market - with some proving willing to help with this information flow and others not.
This has raised the prospect of some fund managers opting not to use certain platforms if the problem persists, which in turn could narrow the options available to clients of advisers who use those platforms.
Phil Deeks, technical director at compliance consultancy TCC, said: "The FCA’s intention is for all relevant firms within this space to consider their role in ensuring effective product governance.
"However, some platforms are not paying due regard to the ‘appropriate and proportionate’ application of the PROD rules and are sticking to the literal interpretation of the later chapters in PROD3, which refers only to manufacturers or distributors.
"This narrow consideration and interpretation means that some have formed the view that they have no explicit regulatory requirements to adhere to in this area."
He said he was also aware of some other firms struggling to extract meaningful management information from platforms to feed that through to other businesses that need it.
"Ultimately, if platforms aren’t providing assistance in this area then the onus rests on advisers and manufacturers to try and identify the most appropriate way to plug this gap and meet their obligations," he said.
Mike Barrett, consulting director at the Lang Cat, said: "This whole area of PROD & target market feels like a bit of an issue to me.
"I don’t think many advisers have got anywhere near to understanding what the expectations are here. Platforms have role to play, but some (not all) are neither manufacturer or distributor so exactly what the role should be is unclear."
Under Mifid II, for each product, investment firms need to identify a potential target market and the type of client whose needs, characteristics and objectives it will meet.
If the product provider requires information on product sales to comply with the rules, distributors will have to offer it up but advising a client to invest in a product in a target market which the manufacturer didn't intend is not necessarily a regulatory breach.
Distributor is a wide term that in its product governance guidelines the European Securities and Markets Authority said covers "a firm that offers, recommends or sells an investment product and service to a client".