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Dear Pat: How to make the FCA happy on platform due diligence

Sharing advisers’ concerns, plus news from The Platforum HQ, and snippets from the Financial Conduct Authority about platform due diligence. By head of adviser relations Emma Napier

Emma Napier The Platforum 250x255

I am going to use this piece to share some of the more interesting conversations I have had over the last month or two, insights from

the goings-on at Platforum HQ and some snippets from the Financial Conduct Authority about platform due diligence.

Well, I have to say that the first three months of this year have been manic – I have been all over the place talking to advisers eager to now press on with those final few niggling bits and pieces for life in the post-RDR world.

The documentation of platform selection is one of those loose ends advisers have been putting off – everyone knows they need to do it and the regulator has been clear in its communications long before the RDR but no one really seems to be sure exactly what is required, how often and what it should look like. 

Please don’t sigh and turn the page… hear me out.

How many times do I walk into a firm and the principal says “just tell me what I need to do to continue using platform X” – sound familiar?

Most firms we speak to nowadays are using platforms in their business as formality, it is nothing new anymore, it just makes sense – platforms provide a pretty good way of processing business in a systematic way.

But there are, at the last count, 30-plus providers in the adviser space – so is it okay to just assume that the platform(s) you have been using for the past two years is still right for your firm?

The answer is no, it is not okay.

I think my first question to most firms is which platform do you use and what do you think of it?

At The Platforum, we like to share all the adviser feedback on platform experiences via our User Leaderboard – it is free of charge so do take a look and please do leave your own reviews.

It is worth spending five minutes reviewing your peers’ experiences for you to make a call as to what is important and what is not – to you.

You would be surprised how many times adviser firms tell me: 

“Yeah, they are alright”

“Bit slow in responding when there’s a problem which drives me mad”

“They don’t have ETF’s – very frustrating”

“Lots of whizzy gadgets which I just don’t use but they seem to be ok and I like the BDM”

The point I want to make is that maybe the platform(s) you are using are absolutely right for your business and your clients but you need to test that theory and there are certain things that make the testing easier to measure.

As I am writing this piece I have spent the day with the lovely and very astute Rory Percival, technical specialist at the FCA.

Rory has been speaking at our annual spate of adviser roadshows up and down the country. This year the theme is best practice.

Rory has been very public in expressing just how different the new FCA is to the old FSA.

I quote: “The FCA are absolutely not the FSA rebranded – the whole structure, culture, supervisory is all very different.”

Rory, we hear you loud and clear, yet advisers are still nervous, confused and wanting that checklist for satisfaction.

I am sure the FCA has learnt from its predecessors; but advisers, listen up – supervision of platform use will be on the hit list of thematic reviews later this year. 

There are no checklists and there are no formal guidelines– but there is guidance and there are tips.

Follow Emma on Twitter @emmanapier

 

PAT’s tips on platform due diligence

Read and re-read the regulator’s guidance: The FSA factsheet Platforms: using wraps and supermarkets, is referred to time and time again – have a read of the nine areas considered important with respect to platform use but do not just use this as a template, more of a tool to formulate your thinking.  

Ask your clients: I’ve heard our managing director Holly Mackay tell advisers it’s not treating customers fairly, it’s actually “Treat your granny fairly”. The FCA told me recently it had not yet met one firm which, when it asked its clients about its service, did not learn something (and subsequently change or review its service as a result). 

Think about it: Be really, really honest with yourselves about exactly what it is you want the platform to do – is it simple trading or execution or do you want that integrated cash-flow modelling tool? How well has your chosen platform done – has it overpromised and under-delivered? How important is having access to ETFs?  

Sense-check: Reviewing the market, eliminating those obvious no-nos but revisiting any providers discounted in the past who might now look good (or your peers recommend a second look). What does the pricing look like? How good is the service? What do others think? Will this provider aid delivery of my client service proposition (and for all clients)? Should I have a different provider for some of my clients? What does this service look like?  

Document it:  A good due diligence document is one where the firm has documented its thought process and highlighted its key criteria and justified its selection which matches its own objectives in achieving good customer outcomes.

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