The Financial Conduct Authority (FCA) has today introduced a package of measures to support consumers who invest through investment platforms, allowing them to find and switch to the right one for them.

In the regulator’s final report of the Investment Platforms Market Study, the FCA found that, while competition is generally working well, some consumers and financial advisers can find it difficult to “shop around and switch to a platform that better meets their needs”. According to the authority, consumers can often find it difficult to switch due to the time, complexity and cost involved, partly influenced by the exit charges they incur and the difficulty of switching between unit classes.

In a bid to combat the issues identified, the FCA is consulting on rules to allow consumers to switch platforms and remain in the same fund without having to sell their investments, while also proposing to either cap or ban exit fees. The proposed restriction would apply to platforms, along with firms that offer a comparable service to retail clients.

Commenting on the proposals, FCA executive director of strategy and competition Christopher Woolard said: “While the market is working well for most of its consumers, the package we’ve announced today should make it less expensive and time-consuming for investors to shop around and move to the platform that best meets their needs. As part of that, we believe it is right that we restrict exit fees, so people can move their money freely.”

The regulator is seeking views from the wider market about how a restriction could work, before consulting on any final rules, and has welcomed the progress the industry has made to improve the switching processing, particularly those involved in the STAR initiative.

The FCA will review progress made by the industry to improve the switching process later this year, and again in 2020, if needed. The authority said it will consider taking forward further regulatory action if the efficiency of the switching process does not improve.

The FCA consultation on new rules for switching and feedback on the questions regarding exit fees runs until 14 June 2019, with the regulator then potentially consulting on final rules for exit fees.

Hargreaves Lansdown head of policy Tom McPhail said: “The FCA has made it very clear to the industry it has to collectively put its house in order, or face further regulatory intervention and censure. This issue presents unique challenges, given firms’ dependence on counterparties to cooperate in executing customers’ instructions.

“Through a working group of ten trade bodies representing the whole financial services ecosystem, the industry has created a set of common standards to deliver faster transfers and better customer communication. This is the STAR project referred to in the FCA paper. Hargreaves Lansdown, along with a growing number of other leading platforms and product providers has already committed to this framework.

“Our goal is to be able to routinely execute transfers in a matter of hours, rather than the days or weeks it still too often takes at the moment. All firms that have an interest in the transfer of customer assets should join us in signing up to the STAR initiative.”

Hargreaves Lansdown CEO Chris Hill concluded that, overall, the market is “working well and helping consumers enjoy good outcomes”, and is “pleased” that the FCA will look to apply restrictions to exit charges “across the wider retail distribution market”.

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