The FSA has warned advisers not to be over-reliant on platforms.
In the Financial Risk Outlook 2010 paper published last week, the FSA says growth is expected to continue, with 50 per cent of new investment business transacted through platforms.
It says firms should not become overly dependent on a platform’s services and should offer consumers suitable products, whether or not they are available on a platform.
It says: “The ability of IFAs to deliver competent ongoing advice could be compromised if they are too dependent on a platform’s services, for example, ignoring investments that are not held on the platform.”
Skandia UK chief development officer Peter Mann says he is pleased the FSA recognises that platforms are a service rather than a product.
e adds: “The FSA is broadly supportive of the way the market is evolving and I see it as a positive endorsement of the use of wraps. It has raised some legitimate concerns that I think most sensible platforms are either addressing or will address before the retail distribution review becomes operative.”
Nucleus chief executive David Ferguson says the FSA is “spot on”. He says: “Providing the IFA has due regard for the platform selected and proactively revisits that appraisal regularly, I would not anticipate any problems.”
But he adds: “Where an IFA is aggressively and maybe recklessly moving clients onto one or more platforms with little regard for the consequences, I would expect the FSA to take a dim view, and rightly so.”
Thomas and Thomas managing director Darren Lloyd Thomas says: “Could there be firms out there that have become one-trick ponies, placing everything on one wrap because it streamlines its processes? You bet there are. The FSA is rightly concerned that some clients may be getting bulldozed into a wrap.”
The Investment Quorum chief executive Lee Robertson says: “The delivery of efficient, clearly charged, TCF-compliant products and on-demand reporting to clients must be better all round than ensuring every single fund, every single product and every single tax wrapper is available.”