FCA has published MS17/1.1 as part of its assessment into the potential competition issues outlined in the Asset Management Market Study interim report and in its 2016/17 Retail Investment Sector View. FCA was concerned that because platforms are a significant and growing distribution channel, especially in the direct-to-consumer area, they are vulnerable to manipulation and it is important that they compete to offer services that add value and meet the expectations of consumers and their advisers. FCA wants, particularly, to check that platforms get the best deal for consumers, and do not, for example, compete in the interests of those with whom they have commercial relationships (such as advisers or discretionary managers) rather than the underlying consumer.
The document sets out the scope of the Study and the topics the FCA will explore, which include:
- covering platforms and similar services; retail investors and intermediaries who use the portals or platforms; product and wrapper providers who use platforms to distribute the products; technology providers to whom platforms outsource services; and fund ratings and data providers whose information platforms use and distribute;
- barriers to entry and expansion, including the difference the size of a platform makes and the role of third party technology providers;
- Commercial relationship, including what drives investment choices and how platforms select which product wrapper they use;
- Business models and platform profitability, and how profitability drivers ultimately affect investors;
- The impact of advisers, and the impact of advisers on the cost and quality of the platform and whether any benefits this creates are passed through to investors; and
- Customer preferences and behaviours, including how platforms facilitate choice and value for money products, and whether there are barriers to switching.
FCA is taking a wide view of “platform service”, so it will include services and functionalities that provide consumer access to retail product via an online portal, sometimes through offering online tools to aid investment decisions. FCA plans to publish an interim report by summer 2018 setting out its analysis and preliminary conclusions including, where practicable and appropriate, possible remedies to address any concerns identified. Such remedies could include rule-making, publishing general guidance, proposing enhanced industry self-regulation or introducing firm-specific remedies or enforcement action, removing existing rules, making references to the CMA or simply no further action.
Responses are due by 8 September 2017