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Fidelity and Abrdn have joined a new trade association to steer the £800bn investment platform industry through increasing regulatory scrutiny and a UK government overhaul of the Isa market.
The Platforms Association aims to represent investment sites ranging from those that sell tax-free Individual Savings Accounts and personal pensions directly to individuals to companies that work with financial advisers.
The association, which is also backed by wealth manager Quilter and asset manager Aegon, will be led by Keith Phillips, formerly an executive director at large industry bodies including TheCityUK, the British Bankers’ Association and The Investment Association.
David Moffat, a senior director at technology company SS&C, will chair the board. Moffat said that a trade body was needed partly because of “increasing” regulatory scrutiny on issues including the charges platforms apply and communication with customers.
The Financial Conduct Authority wrote to chief executives of investment platforms earlier this year to address concerns that they were keeping interest earned on customers’ cash deposits while also charging them a fee, among.
Investment sites such as Hargreaves Lansdown, AJ Bell, and Interactive Investor sell directly to consumers, while others provide services to financial advisers who then sell on to their clients. A new breed of digital-focused sites offering cryptocurrencies and other assets has also emerged over the past decade.
But the industry has suffered from the economic pressure facing consumers of late. According to consultancy firm the Lang Cat, platforms used by advisers reported the highest ever outflows of customers’ money last year. The consultancy said this was due to rising living costs and concerns over preserving their wealth in volatile markets.
The Platforms Association wanted to meet regularly with “senior decision makers” across the industry, Phillips said.
He added that “when important discussions are being led by the regulators and government on things such as financial advice, we are able to say here’s the data, here’s what customers are doing and here’s the industry view and our suggestions regarding proposals”.
Representatives of Aegon, Abrdn, Fidelity, Quilter and another member Seccl — a site owned by investment group Octopus — will sit on the association’s board and leadership council.
Although platforms are already generally members of other bodies, such as the Investment Association, the new group aims to address issues specific to the industry and to co-ordinate responses to government and stakeholders.
The group said membership would be open to UK and European regulated companies whose main business is the settlement, custody and safe keeping of retail investor assets.
The body has already formed a list of priorities to tackle, such as addressing regulator concerns over the time it takes for customers to switch between platforms and the operational resilience of platforms, which will be overseen by the leadership council.
But there are also opportunities for the industry, as the new government draws up plans to reform the Isa market.
The Financial Times reported earlier this month that the government was planning to scrap the planned British Isa, a new tax-free product proposed by the previous Conservative administration. This would have allowed an extra £5,000 to be invested for UK-listed equities only.
Investment sites such as AJ Bell have campaigned for a simplification of the Isa industry, warning that the range of products overcomplicates the market and even deters savers from investing. The warning comes as new research reveals Britons have some £430bn of excess savings sitting in cash.
https://www.ft.com/content/b10797f4-d9d7-4aff-b9fc-2355ea40ef65
