Platform and SIPP provider AJ Bell has called for annual platform charges to be disclosed in pounds and pence.
In its response to the FCA’s Platform Market Study interim report, AJ Bell says that reform of charges disclosure is important to allow greater scrutiny by investors.
The company wants:
- Pounds and pence disclosure of annual platform charges
- Regulatory guidance on bulk platform transfers
- A lifting of the ban on cash rebates
- Improved standards and transparency for model portfolio disclosures
Andy Bell, chief executive at AJ Bell, said: “The platform market has grown to a size and importance that merits greater scrutiny but equally it has delivered significant benefits to consumers in terms of lower charges and greater transparency that shouldn’t be derailed by unnecessary intervention.
“In this respect, the interim report hit the right note in terms of highlighting the aspects of the market that need further debate.”
“The FCA is absolutely right to put value for money front and centre of the platform market study and sharpen the focus on revenue margin, expressed as the amount of revenue each platform makes in a year from each £ of assets under administration (AUA).”
He said that revenue per £ of AUA “cuts through” the complexity created by different platform charging structures.
He wants to see investors given the level of charges each platform levies per £ invested.
This would be disclosed as £s of revenue per £100,000 of investment, rather than a basis points measure.
He said that based on the 2016 numbers from the interim report platform fees per £100,000 would range from £220 per year to £540.
Mr Bell said he would also like to see platforms provide a calculator on their websites that showed customers the annual charges that potential and existing customers will pay, in pounds and pence.
He also wants to see switching between platforms made easier.
In addition, he called for the lifting of the ban on cash rebates among other changes to simplify and streamline how platforms run and the charges they levy and to reduce complexity.
The firm reported “strong growth” for the six months ended 31 March, which, as well as increasing profits to record levels, included a 12% rise in customer numbers from 164,557 to 183,482 and a 5% increase in assets under management from £39.8bn to £41.8bn .
Elsewhere in the report highlights included:
· New business growth with net platform inflows of £3.5bn, up 17% (H1 2017: £3.0bn)
· Customer retention of 95%
· Revenue increased 16% to £42.9m (H1 2017: £37.0m)
· An interim dividend payment of 14p per share, a 10% increase compared to the interim dividend last year (H1 2017: 12.75p)
In the period the company launched two new income-focused multi-asset portfolios within its Managed Portfolio Service (MPS) for financial advisers, as well as a new Lifetime ISA.
Preparations for a listing on the London Stock Exchange “later in 2018 or early 2019” were said to be “progressing well.”
Andy Bell, chief executive of AJ Bell, said: “These are the most profitable interim results in our history and are a great endorsement of our strategy and market position.
“The UK retail investment and savings market continues to display strong growth and investment platforms are central to this.”
“We are well placed to continue our growth trajectory and are progressing well with our plans for a premium listing on the London Stock Exchange later this year or early 2019.”