CP19/12: Consultation on Investment Platforms Market Study Remedies

Open consultation: CP19/12
14/03/2019
Consultation closes
14/06/2019
14/06/2019
Policy Statement plus Consultation Paper on exit fees
Winter 2019

This consultation sets out our policy remedies from the Investment Platforms Market Study (IPMS). These proposed changes are designed to reduce the barriers to effective competition experienced by consumers who use platforms and similar services, as described in the IPMS Final Report.

Read CP19/12 (PDF)

Background

The IPMS was launched in July 2017. We wanted to explore how investment platforms compete to win new consumers and retain existing ones to help us assess how we can improve competition within this market and develop better consumer outcomes.

We have now confirmed our findings in the IPMS Final Report which outlines a package of remedies to address the areas of concern we have identified. Some of these remedies involve supervisory activity or ongoing monitoring of industry initiatives, others require changes to the Handbook on which we are now consulting.

These remedies are explained briefly below.

Consultation on making transfers simpler

The IPMS Final Report explains our concern that consumers (both advised and non-advised) often find it difficult to move from one platform to another, for reasons of time, complexity and cost. In this Consultation Paper, we set out proposals to mitigate one of the causes of this concern. We aim to make it easier for consumers to move their assets to a new platform without unnecessary liquidation of investments. We are also proposing a rule to ensure that consumers who move platforms are given the option of a conversion to a discounted unit class, where this is available to them on the new platform.

Discussion on exit fees

In the IPMS Final Report, we state our view that a ban on platform exit fees is likely to be appropriate as a measure to reduce consumer harm. The report notes that to achieve our aim, we need to consider the scope of any such remedy, given that platforms compete in a wider retail distribution market.

We are therefore seeking further views, in particular from firms that were not included in the original scope of the IPMS, on 3 areas relating to exit fees:

  • How an exit fee should be defined;
  • The scope of the intervention, i.e. the types of firm/service that the intervention should apply to;
  • Whether the intervention should be a ban or a cap on such fees.

Who this applies to

This consultation will be of interest to platform service provider firms and firms offering comparable services, as described in the Consultation Paper. The consultation on unit class conversions will also be relevant to fund managers and their service providers.

In view of the discussion and feedback request on wider application of an exit fees remedy, it should also be read by other firms active in the distribution of retail investment products, including:

  • fund managers
  • wealth managers
  • financial advisers
  • life companies
  • banks

The consultation will also be of interest to representative industry bodies and consumer groups. Individual consumers may also find it of interest and their feedback is welcome.

What you need to do

We want to hear your feedback on our proposals. Please send us your comments by Friday 14 June 2019.

Online response form

You can also:

  • email your responses to [email protected]
  • write to Clive Parker, Financial Conduct Authority, 12 Endeavour Square, London E20 1JN

Next steps

For the consultation on making transfers simpler, we will consider feedback before issuing a Policy Statement and finalising our rules in late 2019.

For the discussion on exit fees, we will consider responses to the questions and may issue a formal consultation in late 2019.