FCA raises concerns over platform fees in Dear CEO letter

investmentweek.co.uk:

The FCA said that fees and charges may not represent fair value, especially when looking at customers with different size investment pots.

Director of consumer investments Lucy Castledine wrote a Dear CEO letter to investment platform bosses on Friday (28 September) laying out the regulator's concerns about «key harms».

She said the watchdog is concerned that «platform fees are not properly disclosed, making it difficult for customers to have a clear understanding of what they are being charged».

The FCA said that fees and charges may not represent fair value, especially when looking at customers with different size investment pots and taking into regard platforms' role in the distribution chain.

Castledine also highlighted concerns about the technology used by platforms being poor. She told firms that she expects their resources, which include people, processes, technology, systems, and controls, to «commensurate to the scale and nature of your business operations at all times».

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«Under-investment in operational infrastructure can lead to service disruption or failure, with consequential loss to investors and detriment to markets,» Castledine said.

«It can also hamper innovation, increase operational costs and, may lead to vulnerabilities that can be exploited to control enterprise systems or gain unauthorised access to customer information.

»Where investments in systems, dependencies and service enablers do not keep pace with business growth, this can leave firms susceptible to severe outages and service degradation incidents due to surges in service demands and retail investor activities."

The FCA also outlined its concern over platform transfer times as «more needs