The Financial Conduct Authority today (March 14) produced the 60-page final report in its Investment Platforms Market Study.
The report proposed a ban on exit fees but ditched previous plans to force platforms to police adviser charging.
Here are the four things advisers must know about the FCA's latest platforms proposals:
1) Ban on exit fees
The FCA proposes to restrict exit fees by bringing forward a cap or a ban.
The regulator has asked the industry for their views on how an exit fee should be defined, the scope of the intervention and whether the intervention should be a ban or a cap on such fees.
The deadline for responses is June 14.
2) Making it easier to switch
The watchdog also intends to introduce rules which allow consumers to switch their investments between platforms without having to take the investment out as cash.
The proposed rules would require platforms to offer clients the choice of whether to re-register the units at the new platform (ie an ‘in-specie’ transfer) or to sell their holdings and transfer the cash.
If the client requests an in-specie transfer and the unit class on the ceding and receiving platform do not match, the ceding platform would be required to convert the investor’s holdings to a unit class which the receiving platform can accept.
In 2020/21 the FCA will then review the industry’s progress in making the switching process more efficient and helping consumers access comparable charging information.
The regulator warned if progress has not been made to allow switching by then the FCA will consider "further intervention."
3) Platforms won't have to police adviser charging
The FCA dropped plans to make platforms police adviser charging.
The regulator stated their final view was that to treat customers fairly, advisers must be responsible for notifying platforms when a client contract ends.
Platforms concerned that they are not receiving notifications from advisers were told to inform the FCA.
4) Platforms need to do better
Platforms were found to provide services to advisers which may inappropriately alter their incentives in conflict with their duty to act in the best interest of their clients
Platforms were also told by the FCA they could improve their order handling procedures and carry out more comprehensive best execution evaluations to achieve better outcomes for retail clients.
The regulator revealed while it still has concerns over whether model portfolios make it easy for advisers and investors to compare their propositions they do not think now is the right time to consider further remedies to standardise disclosure for these propositions.
However the FCA stated it will conduct a review of the outcomes of the Retail Distribution Review and Financial Advice Market Review during 2019.
This review will look at whether consumers can make informed decisions and, particularly, whether consumers can make informed choices between model portfolios across the retail investment sector.
