If it's not too late already to be making predictions for the year ahead, I for one am expecting to see an increase in platform switching, more competition, and generally bigger and better platform propositions all round.

If we cast our minds back a couple of years to 2019, platforms were under the spotlight with the FCA's Investment Platforms Market Study.

At the time the regulator said: “We launched this market study to explore whether consumers can make informed decisions about the choice of platform, the investments they choose on it and whether firms compete to add value for consumers.” 

The study found that overall the platform world was working pretty well, and wasn’t raking in the kind of excessive profits that ring alarm bells.

But the FCA also noted there was more to be done before it was satisfied that consumers were getting the best out of the platforms used by themselves directly or by their advisers.

The main concerns around platform switching were around how long it took to complete, and the costs involved. The FCA said this was resulting in consumers staying invested on a platform which may not actually be suitable for them.

The problems then and now

The regulator set out several areas of concern:

·       Exit fees

·       Unit class conversion (that is, the issue of switching where there are discounted or 'superclean' fund fees on the existing platform)

·       Consumers having to cash out investments in order to switch platforms

·       Difficulties for consumers in shopping around, mainly due to complex charging structures

·       The time taken to move from one platform to another

·       Complexities around the switching process

So where are we now?

Since the Investment Platforms Market Study, many platforms have removed their exit fees, so things are moving in the right direction.

But apart from that, I'm not sure there's been a huge amount of progress.

The main sticking point seems to be around the complexity of the platform switching process. This has a knock-on effect on the time it takes to move platforms, with reports of investors waiting anywhere from two to six months for the switch to complete.

Clearly this isn’t acceptable, and the FCA is still keen to fix this.

The regulator has long been a supporter of the industry body STAR, which aims to promote good practice among providers and platforms and remove unnecessary barriers to transfers and switching.

Over the past couple of years STAR has been working on its accreditation programme, which will award providers with ‘bronze, silver or gold’ status in a bid to improve transfer processes. It is set to be launched later this year.

The regulatory focus

This year the FCA is also due to carry out a review of the progress made since 2019.

The expectation is the review will result in some regulatory changes to give a final push for improvements to be made across the industry.

Clearly these kinds of fundamental changes don’t happen overnight, and it has taken a few years to get to where we are.

But it does feel like there are some real changes afoot and for the better, in the hope of finally making it easier and quicker for consumers to access an alternative platform.

Aside from this, platforms themselves are expanding out, with the likes of AJ Bell shortly launching its trading app and abrdn's plans to acquire Interactive Investor.

Elsewhere, there are the looming discussions to be had around cryptocurrency and trading platforms, and getting a handle on this expanding market.

Yet back in the advised space, many firms will now have clear client segmentation in place thanks to PROD.

While many firms will see their platforms as remaining suitable, segmentation and ongoing due diligence may prompt others to finally make the move.

So with all this in mind, I can see platform switching becoming more of a thing. And for me, this change hasn't come soon enough.

Hayley Rabbets is head of Verve services at The Verve Group