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The owners of UK adviser platforms and SIPP providers Transact and James Hay have tabled cash offers for competitor and SIPP provider Nucleus.

The FCA has abandoned plans to ban platform exit fees.

In a regulatory update today the watchdog said the move was no longer necessary as a number of platforms had dropped exit fees after the regulator highlighted the issue.

The FCA criticised exit fees as a barrier to investors moving platforms.

The FCA’s Investment Platforms Market study (2018/19) found that while the platform market “works well overall, there were areas where it could work better.”

One of the areas highlighted was the barrier to moving platforms created by exit fees levied by a number of platforms.

The FCA said in Policy Statement 19/29 it would consult on restricting platform exit fees in Q1 2020.

Due to the Coronavirus pandemic the FCA  then delayed the move to Spring 2021.

It now says: “We have now decided to stop work on this consultation.

“Since expressing our concerns in the 2018 Interim Report, there has been a marked shift in the market away from exit fees, with at least two major platforms announcing that they would no longer be charging exit fees.

“The FCA welcomes the direction of travel by the investment platforms sector in phasing out the use of exit fees.” 

The regulator added that while it has dropped the Exit Fees Consultation it will be closely monitoring the situation and has hinted it will shake up the sector if new barriers to moving platform or any other consumer detriment emerges.

The move to drop an exit fee ban has been criticised by some.

Richard Wilson, chief executive of interactive investor, said: “We are saddened to see this news snuck out on the afternoon of Friday 13th. Exit fees are a recipe for rip offs and a genuine barrier to consumers seeking better value for money - they should have been banned.

“The FCA rightly points out that the direction of travel in the industry has been away from exit fees, in large part because interactive investor and Hargreaves Lansdown have done away with them. But there are still platforms out there that have grown far too complacent, relying on customer inertia and hefty penalties."

“There is no reason to turn off the heat - quite the opposite. Scrutiny on exit fees needs to be extended to life companies, asset and wealth managers, life insurers and beyond. We are completely bewildered by the FCA’s announcement and today is a sad day for consumers.”

SIPP and platform group Embark’s new ‘Advance by Embark’ platform has been added to the Origo technology integration fintech hub.

Financial Planners are no longer using cost as the main factor when selecting platforms, according to evidence in the latest Platform Report in the current Financial Planning Today magazine.

Two rival platform 'engine' providers - who run many UK platforms including AJ Bell - have joined forces following a takeover deal.

Retirement wealth planning firm James Hay has appointed platform veteran Stephen Wynne-Jones as its head of marketing.
Foster Denovo has launched its own investment platform for advisers alongside a new range of Dynamic Portfolios (DPs).
Platform and SIPP operator AJ Bell’s market capitalisation is will be “approximately £651m”, the company has revealed.
Platform and SIPP firm AJ Bell has confirmed plans for a float on the London Stock Exchange next month with the company valued at up to £500m.

Major shareholders Invesco Perpetual and chief executive Andy Bell will have an opportunity to sell down their stakes in the business while broadening the firm’s shareholder base.

Invesco currently has a 44 per cent stake which it is expected to sell down to around 25 per cent.

Mr Bell holds 28 per cent of the business and is expected to retain around a quarter.

AJ Bell says the float would enhance its brand, extend its shareholder group, assist in recruitment and incentivisation and help with its growth strategy.

Platform and SIPP provider AJ Bell has called for annual platform charges to be disclosed in pounds and pence.

In its response to the FCA’s Platform Market Study interim report, AJ Bell says that reform of charges disclosure is important to allow greater scrutiny by investors.

The company wants:

  • Pounds and pence disclosure of annual platform charges
  • Regulatory guidance on bulk platform transfers
  • A lifting of the ban on cash rebates
  • Improved standards and transparency for model portfolio disclosures

Andy Bell, chief executive at AJ Bell, said: “The platform market has grown to a size and importance that merits greater scrutiny but equally it has delivered significant benefits to consumers in terms of lower charges and greater transparency that shouldn’t be derailed by unnecessary intervention. 

“In this respect, the interim report hit the right note in terms of highlighting the aspects of the market that need further debate.”

“The FCA is absolutely right to put value for money front and centre of the platform market study and sharpen the focus on revenue margin, expressed as the amount of revenue each platform makes in a year from each £ of assets under administration (AUA).”

He said that revenue per £ of AUA “cuts through” the complexity created by different platform charging structures.

He wants to see investors given the level of charges each platform levies per £ invested. 

This would be disclosed as £s of revenue per £100,000 of investment, rather than a basis points measure.

He said that based on the 2016 numbers from the interim report platform fees per £100,000 would range from £220 per year to £540. 

Mr Bell said he would also like to see platforms provide a calculator on their websites that showed customers the annual charges that potential and existing customers will pay, in pounds and pence. 

He also wants to see switching between platforms made easier.

In addition, he called for the lifting of the ban on cash rebates among other changes to simplify and streamline how platforms run and the charges they levy and to reduce complexity.

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