FCA questions adviser firms’ practice of charging to switch platforms
14 March 2019
The regulator has questioned whether financial advice firms can justify charging clients to switch platform, when this is part of the ongoing suitability process.
Raised as part of its Investment Platforms Market Study, the FCA has said it is considering “whether we should clarify our expectations for advisers that are charging their clients for switching platforms through guidance”.
The Study found that a significant number of advisers said that they would likely charge clients an extra fee for switching platform on top of their ongoing adviser fee.
Advisers who did so told the FCA that this was “because a platform switch was an advice event which required the production of a suitability report”.
The FCA has said that while it recognises that it may be “reasonable” for advisers to charge for services associated with switching platform, “it is not clear to us why meeting suitability requirements to switch platforms should outweigh the benefits of switching”.
This is particularly the case, the regulator said, where a firm already offers some form of ongoing suitability assessment “and should therefore already have up to date information about the client’s circumstances and objectives, and where advisers regularly undertake due diligence on the platform market”.
In order to properly assess this issue, as part of the additional consultation process arising from the Final Report, the regulator is seeking views on exactly what additional work is required to meet suitability requirements over and above the ongoing suitability assessment “and how such additional work translates into the level of fees being charged to help a client switch to another platform beyond ongoing advice charges”.
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