The FCA has published the Terms of Reference for the Investment Platforms Market Study, which sets out the scope and topics that will be covered.
For the purposes of the study the FCA defines ‘platforms’ broadly. The study will look at both investment platforms and firms that provide similar services by allowing investors or their advisers to access retail investment platforms through an online portal.
Among the topics the FCA proposes to cover in its market study:
- barriers to entry and expansion: (i) do large platforms benefit from economies of scale which smaller firms and new entrants struggle to match? (ii) do third party technology providers make entry and expansion easier or harder? (iii) do platforms face a competitive disadvantage when competing for investors because of regulation?
- commercial relationships: (i) are platforms and similar firms able and willing to negotiate a competitive price on investment charges? (ii) do commercial relationships drive investment choices and what are the implications for investors? (iii) how do platforms select which product wrapper to include on the platform?
- business models and platform profitability: (i) do the drivers of profitability affect firm incentives, the factors over which they compete and what are the implications for investors?
- the impact of advisers: (i) do adviser platforms compete in the interests of the end investor? (ii) do advisers have a positive impact on the cost/quality of the platform and are these benefits passed through to investors?
- customer preferences and behaviour: do platforms enable consumers and advisers to assess and choose distribution and investment products which offer value for money? (ii) do challenger platforms and similar firms struggle to compete as customers face barriers to switching?
- competitive outcomes: (i) how do platforms and similar firms compete on the price and quality of the services and products they offer and the products over which they have influence? (ii) do platform and similar firms’ investment solutions offer investors value for money?
The FCA welcomes feedback on the topics it proposes to explore by 8 September 2017. The FCA aims to publish an interim report by summer 2018 which will set out preliminary conclusions and any potential remedies to address concerns.
View FCA sets out scope of investment platforms market study, 17 July 2017