4. Cash on platforms
I have mentioned this a number of times – the combination of low interest rates and platform charges means that if you are using a platform to ‘invest’ in cash, you are probably getting net negative returns as a result. It’s good to see this finally being recognised, but again some more encouragement on expected practice wouldn’t be the worst thing in the world.
5. Orphan clients
Platforms have always had a treating customers fairly obligation here, but it looks like the bar may be raised. The suggested requirement for platforms to check that clients are receiving an advised service could also be one to watch.
Encouraging signs
Overall, this feels like a study in need of direction. We’re 12 months down with very little real progress to show for it. But, there is good news and here it is: there are very few signs of obvious consumer detriment. As the paper notes: “Platform financial performance does not suggest widespread competition concerns in the market. We do not find sustained excess profitability and many platforms are loss-making.” This is in direct contrast to the asset management market study, with that industry’s average 36 per cent profit margins, and it is noticeable that piece of work moved much more rapidly than its smaller platform sibling.
And finally, with 400 pages of research to digest, we also know a lot more about the market than we did before.
As it stands, it looks like the FCA has bitten off more than it can chew with this work. There should be separate studies for advised and direct platforms, and the advised work needs to account for adjacent regulation such as Mifid II, the competition study for non-workplace pensions, the asset management market study and the ongoing defined benefit transfer work.
All of which should probably keep everyone busy until next summer, when you can expect another regulatory knock on the door… but when you open it, there will again be no one there.
Mark Polson is principal of platform and specialist consultancy the Lang Cat
