Our Platforms Portfolio Supervision Strategy
The FCAs key concerns about harm within the Platform Portfolio include:
- Fees and charges not representing a fair value, especially when looking at customers with different size investment pots and taking into regard platforms’ role in the distribution chain. Platform fees can sometimes not be easily determinable, making it difficult for consumers to have a clear understanding of what they are being charged for.
- Platform firms do not always have sufficient systems and controls to protect customers from loss of investment savings or personal data due to fraud/cyber-attacks.
- The average time it takes customers to transfer their investments and savings between platforms is currently too long.
- Platform firms do not carry out proper due diligence on non-standard assets (NSAs), meaning some customers may hold unsuitable high-risk investments.
- The loss of access to the platform in the even of IT upgrades or re-platforming exercises.
Within the ‘Dear CEO’ letter, the FCA have provided what they expect of Platform firms to combat the above stated key harms. They have also provided updates as to what it is the FCA itself will be doing, so that these firms know what to expect in the upcoming regulatory sphere. Examples of what the FCA will be doing is undertaking proactive work on fair value and the transparency of costs and charges and proactively engaging with firms that hold NSAs to evaluate their assessment of their potential liabilities and whether they are taking appropriate steps to address them.
It is the responsibility of a platform firm to ensure that it meets the requirements and obligations as set out in the ‘Dear CEO’ letter. The FCA will be using SM&CR to engage directly with accountable individuals on areas of concern.