The FCA says platform clients must be made aware of possible cost increases resulting from being moved to clean shares.
The regulator has today published final guidance on converting platform clients to clean share classes. Changes to regulations have prompted some platforms move to clean share classes already.
In October the regulator released a guidance consultation explaining it did not expect platforms to convert clients to clean share classes if there was client detriement. It prompted some questions from platforms about how they should assess client detriment, and some were frustrated at delays publishing the final rules.
The regulator now acknowledges moving to clean may mean “some clients may be better off and some worse off.”
It says: “To mitigate the risk that some clients may be worse off, firms should ensure in all cases that clients have sufficient notification of and information on the proposed conversion to enable them to seek advice or make an informed decision on whether to transfer their investments to another platform.”
Money Marketing reported in November that costs for some clean share classes are more expensive than the bundled share class.
Lang Cat senior consultant Samantha Lynn says: “This final guidance is helpful in expanding on the FCA’s views in a couple of areas, especially around customer communication where funds are held via nominee arrangements. It’s just a shame it has taken until now to publish it given that several platforms have already completed bulk conversions for all their customers.”