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FSA to visit firms in platform probe

The FSA is to conduct a series of visits to advisers using platforms after warning that it has concerns about conflicts of interest, potential increases in consumer costs and inappropriate investment advice.

Retail policy and themes lead Rory Percival says the regulator has worries over how advisers manage conflicts of interest on all platforms, including adviser-owned wraps.

He says: “If you are an intermediary and have shares in the platform provider, there is a potential conflict of interest. If you fail to manage a conflict of interest, you run the risk of not treating customers fairly.”

In feedback to its platforms discussion paper, published this week, the FSA says consumers may face increased complexity and costs as advisers adopt platforms and may not receive new or valued services.

It warns that advisers may not always have the appropriate competence to provide the level of investment advice they are offering through a platform.

The FSA will contact a cross-section of small, medium and big firms to complete checks over the next three months. Percival says the “small-scale” project will look at management systems and controls, training and competence and cost benefits for consumers.

Nucleus chief executive David Ferguson says: “The FSA should be concerned about any market activity that puts an IFA’s interest before a client’s but I do not see how it relates to ownership of wrap platforms more than anything else.”

Cofunds marketing and proposition director Alastair Conway says: ‘We agree with the FSA’s view that the asset allocation and portfolio planning tools available on platforms should be used to assist the adviser but are not a substitute for individual judgement.”


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