Pronouncements from the FCA are regularly pored over in order to better understand what part of the retail investment market the regulator will focus on next. Where the FCA is light on detail, firms are quick to fill in the gaps themselves.
For all the times people bet on the regulator acting in one sector and it chooses to act elsewhere, there are also occasions when the FCA’s mood is aptly judged. The asset management market study last year was said to signpost further scrutiny of value for money beyond the fund groups and down the value chain to platform and adviser charges.
And so it has come to pass. Within five months of the interim study being published, the FCA published its 2017/18 business plan, heralding another study that will focus on platform competition, and specifically how platforms compete to win new customers and keep their existing ones.
It comes at a time when all eyes are on the success (or otherwise) of various platforms’ replatforming projects, and in particular that of Old Mutual Wealth and to a lesser extent, Alliance Trust Savings.
Given the furore over exit charges on pensions, it was only a matter of time before platform competition and the barriers to switching figured in the regulator’s crosshairs. The cynic in me would suggest that platforms may have been an easy target to deflect regulatory attention to while fund groups were getting both barrels from the FCA.
Beyond outright cartels, assessing competition in any given market is not always clear-cut. Value for money is an equally elusive benchmark, and some in the platform market have questioned whether this can be adequately and consistently measured. Critics have also challenged the FCA on whether it is the right body to judge what value for money looks like.
At the moment the platform study is concentrated on platform providers. But as industry discourse increasingly focuses on the benefits platforms bring to advisers rather than clients, the FCA may start to ask why it is that clients are paying for an adviser business cost.
Parity of regulatory treatment across different products and services is key. The FCA has ruled in the pensions space that savers should not be “deterred” by charges to move products. It would be surprising if it comes to a different conclusion for the system that typically manages the entirety of a client’s portfolio.
Natalie Holt is editor of Money Marketing – follow her on Twitter here