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FCA publishes findings from investment platforms charges review

FCA publishes findings from investment platforms charges review

Financial Conduct Authority has published findings from its investment platforms costs and charges review.

It looked at the experience of non-advised consumers and how easy it is to access charging information and whether it helps consumers understand what they pay.

The review is part of the regulator’s new three-year strategy on ensuring fair value for consumers and helping them navigate the investments market in an online environment.

The FCA found that the main platform charges and the fund charges were signposted.

But the activity-based charges such as telephone trades costs, foreign exchange, and interest on cash were sometimes harder to locate.

It also said that it could not find information about certain charges and that the regulator was “left not knowing whether they would be charged for”.

The review findings on investment platforms were divided into two parts — good practice and poor practice.

The FCA found that some of the good practice by investment platforms included single comprehensive lists of all fees and charges applicable, interactive tools, infographics, calculators and worked examples.

Others included simple and clear explanations of charges for example via information buttons when hovering over terms or phrases used, and platforms stating whether any exit fees apply or not

It also found that some platforms are using the UK Platform Group leaflet to help explain charges.

The regulator suggested that one way of helping consumers is “to clearly state that, if there are fees which are not listed, then that means they do not apply”.

On poor practice, the FCA found a lack of a succinct comprehensive list of charges being clearly signposted, information being spread out across different webpages, too many links to different sections and pages.

It also found omission of a clear statement of the interest applying to any cash held or the information being ‘hidden away’ in legalistically worded terms and conditions.

The FCA added that this could lead to confusion and a lack of confidence for consumers making comparisons on price information.

It said platforms should be aware of its previous compliance reviews in February 2019 and February 2021 respectively.

“These highlighted some failings in relation to cost information shown in marketing documents not matching the information in regulatory documents, and some firms using assumptions which make costs look as low as possible,” the regulator said.

The FCA called on platforms to take several actions to improve the consumer journey by providing both existing and potential clients with all costs and charges clearly explained, total prices/aggregated costs expressed both as a cash amount and as a percentage with a breakdown available and illustrations showing effect of costs on returns.

It said this information should be provided in good time before the provision of the investment business.

The regulator also said that platforms should consider how they satisfy this timing requirement in an online environment where transactions are typically concluded in a short timeframe.

It added that the information should be openly published on websites to ensure they meet the information needs of potential clients.

In February, the FCA set out plans to encourage more consumers to invest through non-advised services in “a guided sales model”.

The proposals as part of the regulator’s work on consumer investments included greater support for hybrid models, smaller fund selections and stronger nudges to help consumers make decisions.

An FCA spokesperson told Money Marketing: “As part of our consumer investments strategy, we want more consumers to invest their money when that is the right option for their circumstances. Many consumers find investments complex to navigate, and we want firms to support them through this journey.”

The regulator confirmed that it was consulting the industry on regulatory changes to make it easier for firms to provide more help to consumers who want to invest in relatively straightforward products.

It will set out the final proposals from the consultation later this year.


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