Responding to delegate concerns about client protection should a platform go bust, at the Platform Evolution conference in London yesterday, FSA senior associate for investment policy Steve Tully said it is no secret that most platforms do not make money.
He said: “Let’s face it, no firm logically is in business not to make money otherwise, ultimately, what is the point.
“Clearly these firms continue to be backed presumably because they believe longer term that they will get a return.
“What is the worst case scenario? Some of them will pack up their bags and go or their backers decide they are not going to give them anymore cash.
“Those are possibilities. The most likely situation to occur would be, I would guess, that they would be bought out.”
However, Tully said that you could not “totally and utterly” say that a platform would not pull out the market.
He said: “Amex did a few years ago, or indeed on a smaller scale we had UBS pulling out last November. You can’t totally discount against that. Whatever financial firm you talk about there is no absolute cast iron guarantees attached to that.”