Two Tilney portfolios – the aggressive growth and growth funds – are listed on its site in its ‘top selling’ category, however.
Jason Hollands, Tilney managing director, says the firm’s policy not to self-rate its own funds was put in place to prevent conflicts of interest.
“We make our funds readily available on our site as a choice, but we don’t include them on our list of top rated funds because it is very difficult to be both judge and jury,” he notes.
“The Bestinvest recommended list actually reflects the underlying top hitting funds that we like in our buy universe.”
However, asked if the FCA report provides a scathing insight into the lack of transparency in the “fund supermarket” sector, Hollands hesitates.
“I think you have to bear in mind that it is only based on three platforms,” he stresses. “It wasn’t a review of the entire marketplace.”
If Fidelity, which has a number of its own funds in its buy list, was one of the data providers, the findings would be skewed, Hollands says.
“It’s not clear that this is necessarily commonplace,” he says.
AJ Bell does recommend a number of its own products on its favourite funds list accessible via its Youinvest platform.
PR head Charlie Musson notes the FCA’s report revealed best buy funds generally outperform the wider market and are cheaper, which is why “being aware of these funds can be helpful for investors”.
“Ultimately the decision on which fund to invest in remains with them and we would always encourage them to do their own research, but we want to make that research as easy as possible for them.”
Even Cookson agreed that best buy lists were generally helpful for the consumer, provided when they can tell when a fund is affiliated or not.
“With affiliated funds where the platforms’ potential conflict is visible, investors seem to largely undo the bias,” he says.
“However, pre-RDR, when the conflict arising from varying commission rates was present but not visible, investors did not alter their behaviour.
“In short, where the conflict was visible, consumers reacted. Where it wasn’t, they didn’t.”
The bottom line, says Cookson, is “the question of how consumers engage with retail investment platforms is ripe for further research”.
