The watchdog announced today as part of its final asset management report that it will be launching an Investment Platforms Market Study.
This, it added, is to investigate how firms offering similar services in adjacent markets compete to win new customers and retain existing customers.
It said this came after respondents to its asset management review confirmed its opinion that further work is warranted to assess the significance and scope of the issues raised.
The regulator has identified several issues with the current platform model.
Among these, it said investors are not always readily presented with a choice of passive funds through platforms and rating providers.
It also found retail platforms can secure discounts on fund charges but this practice did not appear to be widespread – and it was not clear that retail investors benefit fully from the potential buyer power available to platforms.
Elsewhere, it highlighted that investors can be charged a range of different platform fees, potentially making it difficult to understand the full cost of investment.
Hargreaves Lansdown supported the FCA’s investigation, despite its stock price dropping as much as 3% on the news earlier today.
Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “The reaction in the share prices is relatively minimal which probably suggests expectations have been met in terms of what the market was thinking that the regulator was going to say.”
