The FCA is to examine the level of due diligence advisers carry out when choosing a platform as part of a thematic review later this year, Money Marketing understands.
In its 2014/15 business plan last month, the FCA annouced it would be carrying out a thematic review on “effective due diligence for retail investment advice”. The regulator is still assessing the extent of the review and what it will include, though Money Marketing understands this will cover platform due diligence.
A spokeswoman for the FCA says: “We are still undertaking the scoping work for the thematic review into due diligence and will announce in due course what areas the review will cover.”
Since April, platforms have been required to charge on an unbundled basis and have to pass all rebates back to consumers on new business. The final rules state that advisers are responsible for ensuring the platforms they use are compliant.
The Platforum managing director Holly Mackay suggests advisers address questions beyond just price and functionality when choosing a platform. She says: “Advisers need to ask themselves things like: What do my clients actually need? Does this client need a platform in the first place? Do I need more than one? Does my client understand what it costs? Is the platform reliable?”
The Lang Cat senior consultant Sam Lynn says: “There is an in-built tension at the heart of platform use – suitability for individual clients versus scalable, repeatable efficiencies for an adviser business. That is a recipe for potential conflict of interest so it is really no surprise to see the FCA wanting to take a closer look at how advisers make their platform selections.”
Invest Southwest managing director David Penny says: “Past failures like Keydata show there can be no harm in checking advisers are working with organisations that are reputable and solvent, and that includes platforms.”