On 4 May 2022, the FCA published the findings from its investment platforms costs and charges review.
In its Investment Platforms Market Study the FCA said that it would keep the role of platforms in helping consumers understand their investment costs under review. The FCA reviewed current practices and have now set out their findings.
The FCA explains that it focused on the experience of non-advised consumers. It looked at how easy it is to access charging information and whether the information available helps these consumers understand what they pay. The FCA reports that it could generally identify and compare the main platform charges and the fund charges were signposted but activity-based charges were sometimes harder to locate, such as telephone trades costs, foreign exchange, and interest on cash. Where the FCA could not find information about certain charges, it was left not knowing whether they would be charged for.
The FCA also sets out examples of good and poor practice it observed. It also reminds platforms that they should be aware of the FCA’s previous compliance reviews in February 2019 and February 2021. These highlighted some failings in relation to cost information shown in marketing documents not matching the information in regulatory documents, and some firms using assumptions which make costs look as low as possible.
The FCA also reminds platforms that they need to provide existing and potential clients with:
- All costs and charges – clearly explained.
- Total prices/aggregated costs – expressed both as a cash amount and as a percentage – with a breakdown available.
- Illustrations showing effect of costs on returns.
The FCA states that platforms should review its findings and ensure their compliance with the FCA Handbook rules. Platforms should also familiarise themselves with the FCA’s proposed Consumer Duty and be aware of its Consumer Investments Strategy.
The FCA will be carrying-out a review of industry progress in improving the switching process.