Speaking at a Fidelity breakfast briefing in London today, Hicks said the Financial Services Authority has now realised that platforms are fundamental to making adviser charging work because of the cost, complexity and system developments involved.
But he said: “If platforms are at the heart of one of the FSA’s big principles of RDR, and the industry is relying on them so much, then the capital adequacy requirements could be expected to go up because the impact of a platform failing would be very great.
“So you would expect platforms to be very well capitalised and it is not news to say that not every platform in the industry is well capitalised.”
Hicks says any new entrants to the platform space will struggle due to high barriers to entry, including capital requirements.
He said: “We have seen new entrants come in and go. But I think it will be very difficult for new entrants to enter the platform industry in the UK because the barriers to entry are now really quite high, especially in terms of that capital.
“The capital is substantial. It is not just about coming in now with a large pot of money. You need a large pot of money to come in, then another pot to spend the next year then the next year and so on.”