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Platforms are urged to launch lifeboat service

Finance and Technology Research Centre director Ian McKenna is calling on the platform industry to create a “lifeboat service” to help with an orderly wind-down if a platform fails.

Following a series of comments made by the FSA on the lack of profitability in the platform market, McKenna is urging the wrap community to put in place a safety net for any potential failures.

He says: “If there is a risk that one or more wrap pro-viders may no longer be able to trade in the long term, there is a clear need for a lifeboat service that could step in and take day-to-day operational control of any platform in difficulty in order to facilitate an orderly closure.

“The lifeboat could also protect the long-term value accrued in the failing platform in order to maximise the amount available to any potential creditors.”

McKenna proposes that the cost of the service should be spread across the players in the market, who he believes will benefit by avoiding damaging adverse publicity at a crucial stage in the development of the platform marketHe says: “At some point, it must be likely that a platform will fail, especially where some of those businesses have been new start-ups.

“After all, 90 per cent of new start-up businesses fail. Why should the wrap and platform industry feel it is immune from such risks?”


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It was interesting to read a news story not too long ago in which a study found that around 15 per cent of financial advisers are continuing to shun technology by running paper-only practices. More than 120 of the 800 intermediaries surveyed by 1st-The Exchange admitted to “just using paper” to store and manage client data, to which the software provider says the results may be indicative of the sector as a whole.

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