REACTION

Fresh from calling for a radical shake-up of the UK’S £7 trillion asset management industry, the financial regulator has now set its sights on the growing online investment market.

The Financial Conduct Authority (FCA) said its probe would examine whether online investment platforms, used by consumers and financial advisers, are competing effectively to use their “bargaining power” to get investors a good deal.

Along with looking at value for money, the watchdog will assess whether platforms’ relationships with rival operators, as well as those with asset managers and fund-ratings providers, are working in the best interest of consumers.

The FCA pointed out that the platform market has grown rapidly over the last eight years, with assets under administration for both adviser and direct platforms swelling from £108 billion in 2008 to £500bn in 2016.

In principle, platforms allow people to “pool” their money with other retail investors with the aim of achieving better investment returns, the

0 The FCA wants to check consumers are benefiting from online platforms

“This paper is not simply about the price charged by retail investment service providers, it is about the value they deliver to investors.”

HARGREAVES LANSDOWN FCA said as it called for feedback into its investigation to be given by 8 September.

Christopher Woolard, the regulator’s executive director of strategy and competition, said: “With the increasing use of platforms, and the issues raised by our previous work, we want to assess whether competition between platforms is working in the interest of consumers.”

He added: “Platforms have the potential to generate significant benefits for consumers and we want to ensure consumers are receiving these benefits in practice.”

The watchdog said it aims to publish an interim report into its findings by next summer, setting out its preliminary conclusions and any potential remedies to address concerns over competition and value.

Its latest probe comes just weeks after the FCA detailed a series of concerns around the asset management industry, arguing that price competition was weak, investors were sometimes unclear on what the objectives of funds are,