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FCA: Firms are not putting clients at heart of platform decisions

Some advisers are failing to put client outcomes at the heart of their platform due diligence, according to FCA technical specialist Rory Percival.

Speaking at the Institute of Financial Planning annual conference in Newport, Percival said advisers should be assessing which platforms offer the best deal for their clients on a regular basis.

He told delegates: “The platform is paid for by the client, so we expect advisers to be thinking about how they act in the client’s best interests, and how they get the client a good deal. 

“That is why we expect firms to think about this on an ongoing basis, because what is a good deal for the client now might be very different in five years’ time.

“We see firms that, in their due diligence process, are not thinking about the client, but are just getting due diligence packs from the platform. That is fine for information but it does not relate to the firm’s clients. 

“We have also seen firms that justify using a platform based on reasons that are very much firm focused,” he adds.

“All we are asking people to do is think about what is right for the client. You would not move a client for a few basis points, but there are some clients who, because of the pricing moves over the past year, could move to a platform that charges less than half what they are paying.”

The FCA will look at platform due diligence as part of a thematic review on retail investment advice due diligence later this year.

Percival said the regulator does not view platforms as a product or as a piece of technology, but as a service.

He said: “We appreciate that moving platforms is a big issue for a firm and for clients. 

“It is not something we expect firms to take lightly or to be doing all the time, but if there are significant differences between platforms and, having gone through the due diligence process, you have decided another platform is best for your clients, then you should be switching.”

Percival said that while there is no set frequency rate at which platform due diligence should be carried out, the regulator would be happy with firms carrying out the process on an annual basis, provided it was of sufficient quality.

The Lang Cat principal Mark Polson, also speaking at the event, said many of the issues around platform due diligence relate to the “prioritisation” between suitability for the adviser and suitability for the client.

He said: “We talk about platforms as if they are things that we buy as advisers, but of course it is clients who pay for them.”

Polson also said he expects more platforms to introduce fixed or capped fees as opposed to percentage charging.


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