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FCA: Product costs cannot subsidise wrap charges

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The Financial Conduct Authority says platforms who market their platform charge as free or appear to offer lower platform pricing for their own funds will come under scrutiny.

In its platform policy statement published today, the regulator said product costs should not be used to subsidise platform charges and the platform charge should not vary dramatically between products.

The FCA says: “The platform charge should essentially be similar across all products on a platform where there is not an appropriate reason for it to vary.

“So if a platform service provider is also a fund manager, we would not expect the platform to be labelled as free if the consumer invests in funds operated by that manager.”

The regulator added it is working with firms to ensure consumers are clear about the cost of the platform service.

It adds an example of good practice is where a platform gives pricing information quarterly and half-yearly, setting out in pounds and pence the exact charge during that period.

Platforms such as Axa Elevate have offered preferential platform rates if people invest in their range of Architas funds.

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