Consumer Duty has forced adviser platforms to take a long hard look at their charging practices. They will need to keep looking, according to our latest report for Platforum subscribers, UK Adviser Platforms: Pricing.

Responding to the FCA’s Consumer Duty initiative has proved complicated for platforms – and of course other players too. The process of deciding what’s fair value charging for a range of different services has started, but there’s plenty more to do.

The elimination of transferring-out fees out has accelerated. Nevertheless, some platforms continue to argue plausibly that shifting assets to a competitor involves them in extra work, so it’s reasonable to charge for the task. On the other hand, the practice probably does deter platform switching. Getting the right balance is complicated.

The practice of pocketing some of the interest earned on clients’ deposits has long been another area of contention. Arguably the FCA should have stopped it years ago. Solicitors long ago stopped taking the interest on clients’ money, for instance. However, the issue has become even more prominent as interest rates have soared and serious money is now at stake.

The FCA has at last labelled platforms’ treatment of cash as a potential ‘risk of harm’. So platforms will need to respond with much better disclosure and evidencing of fair value. The platforms’ argument that retaining some of the interest on clients’ deposits helps to keep down the other fees has some merit for consumers: retaining some of investors’ gross interest is more tax-efficient than paying explicit platform fees from taxed income. But it does lead to cash-heavy investors effectively subsidising others.

Full and fair disclosure is a must and maybe simplicity and transparency are more important than tax breaks – especially from the FCA’s perspective.

At Platforum, we will be keeping an eye on the impact of Consumer Duty on platforms – and other players. But it is just one of many drivers of proposition and pricing strategy. And it’s complicated.

Platforum has recently published UK Adviser Platforms: Pricing, our annual analysis of pricing in the UK adviser platform market, reviewing platforms’ rate card pricing structures as well as their bespoke deals with advisers. For more information, pleasget in touch.