FCA publishes platform policy statement

The FCA has published its long-awaited platform policy statement following its investment platform market study.

In March 2019, the regulator published CP19/12, a consultation on rule changes that aim to make it easier for consumers to transfer their assets from one platform to another.

The FCA suggested the consultation was part of a wider package of remedies from its Investment Platforms Market Study (IPMS) – which found that competition in the market is ‘limited by the barriers facing consumers when they try to switch platforms.’

The new policy statement has summarised the feedback the FCA received on CP19/12, and has set out its final policy position. It also contains the final rules which implement the FCA’s policy decisions, which the regulator suggested had the aim of improving competition between platforms.

Commenting on the new statement, Altus founding director, Ben Cocks, said: “It will come as no surprise to anyone who’s followed the platform market study that the FCA has announced it is mandating the support of conversions.

“With so many discounted share classes now available, efficient conversions are needed to help investors easily transfer accounts between platforms. And in the FCA’s mind, easy transfers for customers means healthy competition between platforms.

All the necessary standards and technology to support electronic conversions are already in place and we’re just waiting for platforms, wealth managers and fund managers to adopt them. Clearly the FCA felt the industry needed a nudge. In short, the conversion solution is oven ready. And the FCA now says just get it done.”

The statement summarises the feedback the regulator received, as well as the responses to it, with the FCA suggesting it will be of interest to all platform service providers, fund managers and their service providers, financial advisers, consumers of platform services and consumer organisations.

AJ Bell chief executive, Andy Bell, added: “Transfers of assets between platforms is an area that needs improving in order for customers to more easily move to better value services.

“The decision by the FCA to require platforms to offer in-specie transfers of funds as well as share class conversions where this is required to facilitate an in-specie transfer is a welcome move. However, this largely just reinforces what is already common practice within the industry.

“These changes won’t remove the complexity of multiple share classes which is arguably a bigger barrier to transfers, because not all platforms can hold all share classes. The solution here is to reintroduce cash rebates, on the basis that these must all be paid to the customer’s account and cannot be retained by the platform, so it is disappointing the FCA has decided against this.

“We note the FCA is planning to consult on exit fees early next year and we look forward to participating in that consultation. We are supportive of the FCA’s direction of travel here and we believe any ban or cap on exit fees should be applied across all similar products and services, including life company products and vertically integrated firms.”

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