Platforms hit back at claims they will poach clients

Platforms hit back at claims they will poach clients

Platforms have hit back at claims they will use proposed new FCA rules on orphaned clients to hoover up business for their own advice arms.

In the FCA's platform market study, the City watchdog raised concerns about non-advised clients who were stuck on advised platforms but still paying an ongoing fee.

To address this problem, the FCA said it wanted platforms to come up with ways of identifying when a client became orphaned and look at shifting these individuals across to lower cost propositions that won't deduct ongoing advice charges.

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But this has raised the prospect of some platforms using this as an opportunity to pass what they identify as non-advised clients across to their own advice arms.

Quilter and Standard Life Aberdeen are two of the larger platforms in the market that both own advice businesses.

Quilter, whose platform has assets of more than £50bn, owns network Intrinsic plus financial advice business Old Mutual Wealth Private Client Advisers.

Meanwhile Standard Life Aberdeen, whose Wrap and Elevate platforms have a combined £54bn in assets, owns the advice firm 1825.

A spokesman for Quilter said the firm has a policy of not pushing non-advised clients to its network Intrinsic.

He said: "The market study was concerned about whether clients could unknowingly continue to pay an advice charge when they are no longer receiving advice.

"So it is worth noting that we remind clients of who we have on record as their adviser on almost all customer correspondence, and all adviser fees are shown to customers on their quarterly statements.

"When we identify a non-advised customer, either because they notify us that they are no longer taking advice or an adviser notifies us that they are no longer servicing the client, we write to the customer setting out the benefits of having a financial adviser, where they can find one and also outlining how we will support them while they do not have an adviser."

He added Quilter ensures the client receives appropriate services to enable them to manage their investments via its online customer centre, allowing them to top up their accounts into their existing fund choice, open a new Isa or general investment account (Gia) and switch funds.

Similarly, a Standard Life Aberdeen spokeswoman said: "We consider all clients on our platforms to be advised until either they or their adviser confirm they have ended the relationship.

"Once the advised relationship has ended, we want to help ensure they get the best outcome as a now orphaned client. We encourage them to seek a new adviser and make them aware of every financial advice option open to them."

She added: "If they no longer want to take advice, they can also consider moving to a direct platform."

The FCA found there were more than 400,000 orphaned client accounts, but it also warned this problem was increasing, with a 9 per cent increase in the number of orphaned client accounts between 2016 and 2017.