FCA May Impose Exit Fee Ban on Retail Investment Platforms

The British regulator said that it wants to make it easier for investors to move funds between platforms

Amidst a wave of Brexit angst, the Financial Conduct Authority quietly released a report on Thursday detailing developments in the UK’s retail investment market.

More specifically, the British regulator was looking at the problems retail investors face when using investment platforms.

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The market for such platforms in the UK has grown exponentially in the last decade.

According to the FCA, investment platforms had approximately $250 billion in assets under management in 2013. Today that number is thought to be in excess of $500 billion.

Similarly, the number of retail investment accounts in the UK grew by 2.2 million between 2013 to 2017.

In its new report, the FCA said that, though profit is not “excessively high” for consumers, the market is working well.

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For better or worse, it isn’t entirely clear what the FCA thinks; the regulator also said that people who pay more tend to get more non-price features and are more satisfied with the products they have.

Easy switch

If there is going to be regulatory intervention by the FCA, it will be in attempting to help consumers move between different investment platforms.

For example, the regulator said that it should be possible to move funds from one platform to another, without first converting those funds into cash.

The FCA also said that it would consider putting a cap on exit fees, or possibly banning them altogether, in order to ensure that consumers can switch to another provider more easily.

“We will review the industry’s progress in making the switching process more efficient and helping consumers access comparable charging information,” said the regulator in its report. “If progress is not made then we will consider further intervention.”

Most of the major platforms are operated by major banks and asset managers. Barclays, HSBC, and Fidelity, for instance, provide some of the most popular platforms to retail investors in the UK.

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