Another focus of the Investment Platforms Market Study, which the former FCA technical specialist Rory Percival highlighted to Professional Adviser last week, is whether or not challenger platforms and similar firms struggle to compete as customers and advisers face barriers to switching, and the potential effects of these on consumer choice.
The Financial Conduct Authority (FCA) has launched an investigation into Britain's online funds "supermarket" to establish whether investors are offered the best deals available.
The regulator has published its terms of reference for its platforms market study, which will look at whether platforms aid good investor decisions and whether they offer value for money.
The FCA is to review how advisers choose their platform and whether platforms are competing to attract advisers rather than improve client service.
"We will also consider whether advisers pass the benefits of competition between platforms onto investors in the form of lower adviser and platform fees".
"With advised platforms", it added, however, "the consumer may not directly engage with the platform and may instead pay their adviser, through the adviser charge, to deal with and manage their investments through the platform".
Product suitability will also make it into the FCA scope of analysis, looking at whether platforms' risk profiling tools match investors to a portfolio mirroring clients' risk level.
It is also concerned that the platform market is becoming "increasingly vertically integrated", which means there are commercial arrangements made between platforms, asset groups and advisers, which may impact impartiality. "The FCA will assess whether these relationships work in the interests of investors".
Specifically, in the case of persistent underperformance, the FCA will check whether this is a result of poor client choice or it is driven by performance or cost.
Ready-made portfolios and multi-manager funds are used by a third of retail investors, according to a survey by Platforum.
The FCA added it expects to publish an interim report by the summer of next year, which will set out preliminary conclusions and outline any potential measures to implement to rectify ongoing issues and concerns.