We have published the Investment Platforms Market Study Final Report and accompanying Consultation Paper 19/12. The reports set out our final findings and a package of measures to help consumers who invest through investment platforms more easily find and switch to the right one for them.
Investment platforms are increasingly being used by consumers and financial advisers to access retail investment products and manage investments online. Our study explored how investment platforms compete to win new customers and retain existing ones, to help us assess how we can improve competition within this market and develop better consumer outcomes.
We found that while competition is generally working well, some consumers and financial advisers can find it difficult to shop around and switch to a platform that better meets their needs. Consumers can find it difficult to switch due to the time, complexity and cost involved - driven in part by the exit charges they incur and difficulties switching between unit classes.
To address the issues uncovered, we are consulting on rules in Consultation Paper 19/12 to allow consumers to switch platforms and remain in the same fund without having to sell their investments and are proposing to restrict exit fees.
The proposed restriction on exit fees could apply to platforms and firms offering a comparable service to retail clients. We are seeking views from the wider market about how a restriction could work, before consulting on any final rules. Stakeholders have until 14 June 2019 to submit responses.
We will also review progress made by the industry to improve the switching process later this year, and again in 2020, if needed. We will consider taking forward further regulatory action if the efficiency of the switching process does not improve.
Since publishing our interim report, we have seen firms and the industry acting to improve the provision of information about costs and charges, helping consumers shop around. As a result, we are not proposing new rules but will review the progress of industry in 2020/21, and consider if further action is necessary.
This publication follows the Interim Report published in July 2018 which set out our provisional view on the way competition works in the investment platform market and how we would like the market to develop.
The Investment Platforms Market Study follows on from the asset management market study final report published in June 2017, which highlighted a number of potential competition issues in the platforms sector.