In the FCA Sector View for 2017, published in April, it also identified the “potential for unsuitable advice being given owing to poorly managed or unrecognised conflicts of interest, for example, because of charging structures and vertical integration.”
Yet, these combined views don’t exactly add up to a full scale intervention.
Former regulator and now consultant Rory Percival says: “The [platform] market study is likely to be from a high level economic and competition perspective.
“Logically you would expect VIFs (vertically integrated firms) to have lower costs due to economies of scale and efficiencies due to the integration of the value chain. However this is not what they will find in the advice market.
“This will concern the FCA as it will be indicative of a market that is not competitive and not operating effectively for consumers.
“As to what the FCA can do about it is another matter. It won’t impose price caps. Mifid II brings a new rule book about product and service design. I suspect that the FCA will leverage off this. But there are limitations as to what it can do to fundamentally change markets.”
Investment Quorum’s chief executive Lee Robertson, says: “Despite the cross-referencing, they seem to be focused on the two individual silos for advisers and asset managers. It might be worth a consideration of the hybrids which are doing both.”
Waller says concentrating on platforms, which are in his view simply a piece of technology, could see the regulator miss the target again. “Regulating platforms per se is total nonsense,” he says.
Yet he still defends the vertical model in the right regulatory environment.
He adds: “The best business of the future will be vertically integrated but transparent. All we need is fresh air and light. If we get total transparency everything else will slot into place.”