LONDON (Alliance News) – The UK Financial Conduct Authority on Monday set out the scope of its investigation into investment platforms, that will explore if there is effective competition in the sector.
The regulator said investment platforms are increasingly used by consumers and financial advisers to access retail investment products and to manage investments, and said the total amount of assets under administration for both adviser and direct platforms jumped to GBP500.00 billion in 2016 from just GBP108.00 billion in 2008.
“Many platforms offer investors and their advisers a range of information and tools to help them make investment decisions and some also offer their own investment products. As part of the study, the FCA will explore whether platforms help investors make good investment decisions and whether their investment solutions offer investors value for money,” said the FCA.
“In principle, platforms allow retail investors to pool their money and achieve better investment returns. The FCA will look at how platforms compete in practice and whether they use their bargaining power to get investors a good deal,” the regulator added.
In addition, to provide investors access to retail investment products and information, platforms interact with other platforms, advisers, asset managers and fund ratings providers. The FCA plans to study whether those relationships work in the interests of investors.
“For the purposes of this 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 products through an online portal,” the FCA stated.
The Investment Platforms Market Study follows on from the Asset Management Market final report published in June 2017, which highlighted a number of potential competition issues in the platforms sector.
In the final findings of its Asset Management Market study, the FCA said it found firms “do not typically compete on price”. The watchdog said this particularly applies to managers offering actively-managed funds to the retail market.
Feedback on the topics of the study on investment platforms will be explored until September 8, after which the FCA intends to publish an interim report by “summer 2018” that will set out preliminary conclusions and any potential remedies to address concerns.
“With the increasing use of platforms, and the issues raised by our previous work, we want to assess whether competition between platforms is working in the interest of consumers. Platforms have the potential to generate significant benefits for consumers and we want to ensure consumers are receiving these benefits in practice,” said Christopher Woolard, executive director of Strategy & Competition at the FCA.
By Joshua Warner; firstname.lastname@example.org; @JoshAlliance
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