On 14 March 2019, the FCA issued its investment platforms market study final report and an accompanying Consultation Paper (Consultation Paper 19/12: Consultation on investment platforms market study remedies (CP19/12)).

The FCA launched its market study to explore whether consumers can make informed decisions about the choice of platform, the investments they choose on it and whether firms compete to add value for consumers. Platforms have the potential to use their scale to improve competition between fund managers. The FCA wanted to further explore the impact that platforms have on the charges investors pay and any factors which may hinder platforms’ incentives and ability to negotiate on behalf of their consumers.

Overall, the FCA found that the market is working well in many ways for both advised and non-advised consumers. Profitability in this sector does not appear to be excessively high. The FCA found that consumers who pay more typically get access to a greater range of non-price features and they are, overall, satisfied with their platform. Platforms also appear to help consumers and financial advisers make informed investment decisions which, taken together, suggests that platforms are competing in the interests of most consumers.

Despite these positive signs the FCA felt that it should be easier for consumers and financial advisers to shop around and more easily switch to firms that better meet their needs. The FCA also feels that platforms should be free to compete by negotiating with fund managers to get discounts on the funds available on their platform.

To address the issues, the FCA has issued CP19/12.

In CP19/12 the FCA sets out proposals to make it easier for consumers to move their assets to a new platform without unnecessary liquidation of investments. These proposals can be summarised as follows:

• a requirement for platforms to offer consumers the choice to move units in investment funds that are common to both platforms via an ‘in-specie’ transfer;
• a requirement for platforms to request a conversion of unit classes, where this is necessary to enable an ‘in-specie’ transfer to take place; and
• a requirement for platforms to ensure that consumers moving onto a new platform are given an option to convert to discounted units, where they are available for investment by the consumer.

The FCA also seeks views on a discussion concerning the potential nature and scope of a ban on platform exit fees. This includes the extent to which any intervention should be extended to other types of firm that compete with platforms in the retail distribution market.

The deadline for comments on CP19/12 is 14 June 2019.